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How Charles Tandy 

Built 
Radio Shack.,, 




By Irvin Farman 



Suggested Retail $19.95 




m ■ f h 



Above all, Charles Tandy was a sales- 
man. He started selling when he was 10 
years old, peddling strips of scrap leather 
from his father's shop to his schoolmates 
for a dime, teaching them to plait whips 
from leather thongs. In high school, he 
sold ladies' belts made out of scrap leather. 
While attending Texas Christian Univer- 
sity and the Harvard Business School, he 
sold ladies' shoes. After serving in the U.S. 
Navy during World War II, he converted 
his father's shoe-findings shop into a thriv- 
ing leathercrafts business, sold it for a 
"back door" listing on the New York Stock 
Exchange, then won it back in a bitter 
battle with management. In 1963, he ac- 
quired control of Radio Shack, a flounder- 
ing Boston electronics retailer with nine 
stores, and built it into the world's largest 
consumer electronics chain in one of the 
great success stories of American retailing. 

At times a whip-cracking tyrant, he 
could be as brutal as he could be charming 
to his executives, depending on the mode of 
motivation he was employing; but he had a 
sentimental streak as wide as his shoulders 

(continued on back flap) 









A 








V 





#0ff CAarfe Tandy Built Radio Shack Mo the 
World's largest Electronics Chain 



By Irvin Fa 



r m a n 



THE MOBIUM PRESS/Chicago 1992 



TANDY'S MONEY MACHINE: How Charles Tandy Built Radio Shack 

Into the World's Largest Electronics Chain. Copyright © 1992 

by Irvin S. Farman. All rights reserved. Printed in the 

United States of America. No part of this book may be used or 

reproduced in any manner whatsoever without written 

permission except in the case of brief quotations embodied in 

critical articles or reviews. For information, address 

Mobium Press, 414 Orleans, Chicago, IL 60610-4487 



ISBN 0-916371-12-3 92-62631 



To the memory of 
Charles David Tandy 
who made it all happen 



"He was a man, take him for 
all in all, I shall not look upon 
his like again. " 

— Hamlet 



Contents 



Acknowledgements xi 

Prologue 1 

1. Start on a Shoe String 7 

2. Building a Business in Peace and War 23 

3. Tandy Leather Company Spreads Its Wings 39 

4. High Hopes Turn to Frustration 53 

5. Saving the Family Jewels 71 

6. "He Could Sell Iceboxes to Eskimos" 85 

7. "Luther, I Don't Understand This Business" 101 

8. A Bargain Basement Buy in Boston 113 

9. The Crusade is Launched 125 

10. Confrontation at the Waldorf 141 

11. A Vision of 1,000 Radio Shacks 159 

12. "When Are We Gonna Get Some Damn Stores Open?" 175 

13. A Champagne Toast at the First of Boston 191 

14. "I Wish My Father Was Here Today" 205 

15. A Dream Fulfilled 225 

16. A Lingerie Department Loses Its Panties 241 

17. A Brush With the Grim Reaper 253 

18. "What Are You Gonna Buy Next, General Motors?" 275 

19. "Bernie, I'll Build You Your Own Synagogue" 293 

20. Zsa Zsa Misses a Ribbon-Cutting 307 

21. Disaster in a Rice Field 319 

22. Radio Shack Goes International 333 

23. A 'Giant' Deal Falls on Its Face 353 

24. A Triple Play for Tandy 365 

25. The CB Radio Bubble Bursts 383 

26. The Birth of the TRS-80 399 

27. "The Biggest Name in Little Computers" 413 

28. "Goodbye, Charlie" 429 

29. A Giant is Laid to Rest 445 

30. A Vision, a Dream 455 



IX 



A cknowledgmen ts 



This book could not have been written without the help of a great 
many people. I am especially grateful to: 

John V. Roach, who opened the Tandy archives to my research and 
challenged me to portray the "real" Charles Tandy, "So that people 
who didn't know him can learn what he was really like." 

Herschel Winn, who helped me navigate many historical and legal 
reefs and shoals. 

Bill Michero, John Wilson, Ken Gregson, Jesse Upchurch, founts of 
knowledge dating back to the Hinckley-Tandy Leather Company days. 

Lew Komfeld, Bernie Appel and Dave Beckerman, for their Radio 
Shack lore. 

Phil North, for sharing his half-century of memories of Charles 
Tandy. 

Kay Dickson Farman, for her encouragement, support and critical 
eye. 

My thanks also go to the persons listed below for the recollections 
and insights they so generously provided: 

Rachel Barber, Ed Bass, Perry R. Bass, Tony Bernabei, Bill Brooks, 
Dr. Bobby Brown, William L. Brown, Jim Buxton, Joyce Cantey, H.E. 
(Eddie) Chiles, Dave Christopher, Bill Collins, William C. Conner, 
Milton Deutschmann, Pam Buckalew Esquivel, Mary Frank, Bayard H. 
Friedman, William M. Fuller, Bill Garber, Jenkins Garrett, James S. 
Garvey, Jack Greenman, Alex Hamilton, Liither Henderson, Leland 
Hodges, Elton Hyder, Jr., John Justin, Robert E. Keto, Paul Leonard, 
Bob Leonard, Janet Lesok, Bob Lowdon, Joe W. Lydick, Paul Mason, 
John McDaniel, W.A. (Tex) Moncrief, Jr., Clif Overcash, Matilda 
Peeler, J. Roby Penn, Connie Powell, Ann Quinn, Lloyd Redd, Charles 
Ringler, Billy Roland, Harlan Swain, Joe A. Tilley, Rice M. Tilley, Jr., 



XI 



ACKNOWLEDGMENTS 



Bill Vance, Hazel Vernon, Eunice West, Delores Whitney, Jim Wright, 
Elaine Yamagata, and Tadashi Yamagata. 

I would also like to express my appreciation to the following individ- 
uals who were particularly helpful in many different ways in making 
this undertaking possible: 

Lynne Anderson, Alma Arterburn, Lou Ann Blaylock, Bettye Ellis- 
ton, Lee Elsesser, Jana Freundlich, Rhonda D. Graves, Pete Griffin, 
Emily A. Griffith, Lydia H. Hays, Ann Hill, Duane Hughes, Dr. E. 
Ross Kyger, Jr., Donna E. Levy, and Barbara Salavarria. 

Irvin S. Farman 
Oct. 1, 1992 
Fort Worth, Texas 



xn 



Prologue 



It was a lovely fall afternoon in New York, the kind of day meant for 
walking along Park Avenue, enjoying the bright sunshine, the parade of 
fashionably-dressed women strolling by, and the gentle breeze ruffling 
the flags in front of the Waldorf-Astoria. 

But for the group of men gathered in a smoke-filled suite inside the 
hotel, there was no time for such frivolous pursuits. That Friday after- 
noon, November 15, 1963, the seven members of the board of directors 
of Tandy Corporation were meeting in the suite of their chairman, 
Charles D. Tandy, and things were getting more than a little strained. 

Some seven months earlier, Tandy had made a deal to take over man- 
agement of Radio Shack Corporation, a Boston-based chain of nine 
electronic stores that was teetering on the edge of bankruptcy. For a 
mere $300,000, which represented a subordinated participation in a 
loan to Radio Shack by the First National Bank of Boston, Tandy se- 
cured an option to buy the controlling interest in Radio Shack. 

Tandy had gone into the Radio Shack deal with his eyes wide open. 
He perceived Radio Shack to be a victim of poor management and a 
promising turnaround opportunity. More importantly, he saw a vehicle 
to broaden the scope of Tandy Corporation by entering a dynamic, 
emerging industry with great potential. Consumer electronics, Tandy 
was convinced, was the wave of the future. Every household in Ameri- 
ca was a potential Radio Shack customer. This was in stark contrast to 
Tandy Corporation, whose primary business was leather goods and 
leathercrafts. Although Tandy Corporation was making money and 
growing, Charles Tandy knew that leather and leathercrafts, with their 
limited scope, would never propel him to where his insatiable appetite 
for achievement, recognition, and reward was driving him. 

And, besides, he was getting control of Radio Shack for a pittance. 



^ PROLOGUE 

When Tandy initially presented the Radio Shack deal to his fellow 
board members in early April of 1963, they rubber-stamped their ap- 
proval, as was their wont, even though some of the directors had mis- 
givings over the venture. Now, at the November meeting at the 
Waldorf, Tandy was asking the board to authorize a major commitment 
of resources to reorganize Radio Shack and to begin building a nation- 
wide chain of Radio Shack stores. 

Radio Shack had lost $4.5 million the year before. It owed $7 million 
to a bank and an insurance company and had a negative net worth of 
$2.5 million. But Charles Tandy was convinced he could turn things 
around, that he could increase Radio Shack's modest gross margins to 
the highly profitable levels he attained at Tandy Leather Company by 
revamping the way Radio Shack did business. Give him a little time, he 
said, and he would remake Radio Shack into a big winner. 

The board members, all long-time associates of Tandy's, had heard 
that song before. Some of them, like James L. West, the president of 
Tandy Corporation, whose tenure with the company dated back to its 
early days as a family-ran shoe-findings business, felt that their primary 
mission was to try to keep a rein on their ebullient board chairman. 

Jim West had watched Charles Tandy grow up, had helped teach him 
the leather business. Now West led the assault on the Radio Shack ac- 
quisition as the board meeting convened in Tandy's suite at the Wal- 
dorf that November afternoon in 1963. 

"Are you crazy?" West asked Tandy. 

"Why would you take on this kind of problem, a bankrupt situation, 
that we don't know anything about, and in Boston, Massachusetts, yet, 
where we got burned once before? Who needs to bail out a bank and an 
insurance company?" 

Tandy, ever-present cigar in hand, stood stolidly in front of the fire- 
place in the sitting room of the suite, fighting to keep his emotions un- 
der control. His tall, heavy-set presence dominated the room. 

Other board members interjected their concerns. 

Didn't Tandy realize that in the past year he had acquired Cost Plus, 

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money? Cost Plus and Radio Shack would be competing for the hard- 
earned profits generated by the Tandy Leather Company, the corpora- 
tion's cash cow. Could they afford to build two national retail store 
chains simultaneously? 



PROLOGUE 3 

But, perhaps most of all, they were worried, they told Tandy, that he 
was spreading himself too thin by personally trying to run Radio Shack, 
Tandy Leather Company, and Tandy Corporation all at the same time. 

Prior to the board meeting, a majority of the directors had come up 
with the idea that if Tandy persisted in pushing ahead with Radio 
Shack, he should relinquish the reins of Tandy Corporation and Tandy 
Leather Company for a limited period, say a year or two, and devote 
himself exclusively to his pet project. Their choice of a temporary suc- 
cessor to Tandy as board chairman was Carl C. Welhausen, the head of 
the Tex Tan Welhausen Division and a corporate vice president and 
member of the Tandy board. 

The chore of presenting the proposal to Tandy was handed to Luther 
A. Henderson, vice president and treasurer of Tandy Corporation, 
member of the board, and a close friend of Tandy's since their Sunday 
School days at Broadway Baptist Church in Fort Worth. 

Even though the proposal was not Henderson's idea, nor did he par- 
ticularly favor the idea, he carried out his mission like a good soldier. 
He met Tandy for breakfast in his Waldorf suite on the morning of No- 
vember 15. 

All through the bacon and eggs, Henderson worked up his courage, 
anticipating what Tandy's response would be. Over the final cups of 
coffee, he could stall no longer. 

"The board has asked me to present an idea to you," Henderson be- 
gan, groping for the right words. "The directors think it would be bene- 
ficial if you had more time to give to Radio Shack without worrying 
about the rest of the company, say for a year or two, until you've had 
time to put Radio Shack back on its feet..." 

He never got to finish what he was trying to say, as Tandy interrupted 
him with a string of expletives that left no doubt as to how he felt about 
Henderson's overture. 

"What's this crap you're trying to hand me?" Tandy demanded. 

"He was so mad, he nearly threw me out of the suite," Henderson re- 
called. "It placed our entire relationship in jeopardy. Eventually, he 
calmed down when he realized I was just doing the board's bidding and 
hadn't been conspiring against him. But he told me in no uncertain 
terms where the board could go." 

When the board meeting convened at 2 o'clock that afternoon, 
Tandy's combative juices were flowing. 



4 PROLOGUE 

He opened the meeting with the statement, "The Radio Shack acqui- 
sition is a good deal for Tandy Corporation." 

Then he added, with a sharp glance at Henderson who was seated 
on a sofa across from the fireplace, "I am perfectly capable of giving 
Radio Shack the attention it needs and keeping the rest of the company 
running." 

The directors remained unconvinced. Led by Jim West, they voiced 
their doubts, giving Tandy every indication they were prepared to reject 
his request for increasing the company's stake in Radio Shack. This, in 
Tandy's mind, was tantamount to torpedoing the entire deal. 

"Now, look, everyone of you has been doing what he has wanted to 
be doing. One of you has been handling the accounting, and another 
has been handling this or that," Tandy stated. "At this time, I am mak- 
ing my point clear. We are going to do what I want to do. 

"If I don't get an affirmative vote on this, then I will sell 
every share of stock I own in the corporation and I will, personally, 
take this on my own hook." 

Tandy then strode out of the room. 

The board sat there, too stunned to do anything for a few moments, 
then began considering its options. 

Tandy might be bluffing, but the board members were not of a mind 
to call him and find out. 

He was, after all, the corporation's largest stockholder and the dy- 
namic force behind its solid growth. He had led the fight to regain con- 
trol of the Tandy Leather Company after a brush with disaster only a 
few years earlier. Tandy Corporation was now a highly profitable going 
concern, with more than 170 leather and leathercrafts stores in the Unit- 
ed States and Canada and sales of more than $20 million. 

With most of their individual net worths tied up in Tandy stock, the 
idea of going it alone without Tandy at the helm was simply not a via- 
ble option to the directors. 

"There were a few minutes of muddling, fumbling and grumbling," 
Bill Michero, an eyewitness to the confrontation, related, "and then it 
was grudgingly decided to give Charles everything lie waiiicu." 

Michero, the corporate secretary, was dispatched to escort Tandy 
back into the room. 

Exuding clouds of cigar smoke in his wake, Tandy returned from the 
corridor outside the suite where he'd been waiting. 



PROLOGUE J 

Sir Laurence Olivier never made a better entrance. 

"Okay, you bastards," he said with a grin as wide as the map of Tex- 
as, "now that you know who's running this show, let's go get 'em." 

Recalled Henderson, "We owed it to him to support him. So we ap- 
proved the deal on his terms. And it worked." 

That sentence may be one of the classic understatements of all time. 

From that November afternoon in 1963 to the day, 15 years later, on 
November 4, 1978, when he died at the age of 60, Charles Tandy saw 
his dream of a national chain of Radio Shacks come true. 

Where he once had talked of hundreds of stores and $100 million in 
sales, he lived to see nearly 7,000 Radio Shack outlets across the land- 
scape of America and sales of more than $1 billion. 

Today, Tandy Corporation, the company he built virtually from 
scratch and to which he devoted his life, has grown into a multi- 
faceted, multi-billion dollar enterprise. Its Radio Shack chain is the 
largest electronics retailer in the world. 

The day after his death, an editorial in the Fort Worth Star-Telegram 
eulogized Charles Tandy as a builder and as a dreamer: 

"His is a story of the American dream, of a man rising as high as his 

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"Tandy wanted to succeed and he worked long and hard to achieve 
success. It was a dizzy, roller-coaster trip that paid off in a billion dollar 
business..." 

This is the story of the man and the trip. 



Chapter 1 
Start on a Shoe String 



On a sultry August day in 1925, a bedraggled young man arrived at 
the Texas & Pacific Passenger Station in Fort Worth after an all-night 
train ride from Tennessee. He carried his worldly possessions in a card- 
board suitcase. In his pants pocket was $1.85, all that remained from 
the $25 grubstake his father had given him to finance his way to Texas. 
The young man's name was Charlie Hillard and he had come to Fort 
Worth because he had a job waiting for hirn there on a used car lot 
owned by his mother's nephew, J.B. Jordan. 

The 19-year-old Hillard had grown up on his father's farm in Oak- 
field, Tennessee, and had graduated from high school that summer. His 
father had offered to send him to Vanderbilt University in Nashville, 
but Charlie had other ideas. 

"Dad," he told his father, "if you'll stake me to $25, I'd like to go to 
Texas and get a job." 

Now, disembarking from the long train ride, suitcase in hand, Hillard 
began walking north along the sun-baked streets of downtown Fort 
Worth towards Jordan's used car business at 21 1 Commerce Street near 
the Tarrant County Courthouse. Fort Worth was in the midst of an epi- 
demic of oil fever at the time, with fortunes being made and lost daily. 
Everywhere, there were signs of construction, with new buildings pok- 
ing their heads skyward. Hillard took in the scene on his long, sweaty 
walk of some 15 blocks from the depot to Jordan's lot, looking into the 
shops, restaurants, and bars along his route, observing the people stroll- 
ing by and ogling the cars rolling past him on the hot-topped 
streets — sedate sedans, jazzy roadsters, and sporty touring cars. 

More than 65 years later, Hillard, by then the owner of one of Fort 
Worth's most successful automobile dealerships, recalled his walk in 
the sun and his arrival at Jordan's office. 



8 START ON A SHOE STRING 

"There was a guy in there, a slender, well-dressed man in his mid- 
30s, smoking a cigar. He and Jordan were visiting when I got there, and 
he listened in on our conversation. After learning that I had just arrived 
in town to go to work for Jordan, the man asked me where I was going 
to live. I told him I didn't have the slightest idea. He told me he knew a 
place that was clean and reasonable. So I got into his car and he drove 
me to the new YMCA building that had just opened in downtown Fort 
Worth. He took me inside and told the clerk I needed a room. Then he 
took $3 out of his pocket and put it down on the counter and said, T 
want to pay this boy's rent for two weeks.' The man was Dave Tandy, 
Charles Tandy's father." 

Dave L. Tandy was a partner in a struggling shoe-findings business 
located in a seedy end of downtown Fort Worth. That business, the 
Hinckley-Tandy Leather Company, would become the forerunner of to- 
day 's Tandy Corporation. The driving force behind its metamorphosis 
from a two-man operation selling soles and shoelaces to shoe repair 
shops into a global consumer electronics retailing giant would be Dave 
Tandy's son, Charles David Tandy. 

In 1925, Dave Tandy was 36 years old and had been in the shoe-find- 
ings business in Fort Worth since 1919. "Shoe-findings" was the term 
given to businesses that supplied shoe repair shops with leather soles, 
rubber and leather heels, shoe laces, shoe polish, and other items. It 
stemmed from colonial days, when firms called "shoe-finders" provid- 
ed the supplies for itinerant custom boot and shoemakers. 

Dave Tandy and his partner, Norton Hinckley, made a good pair, the 
feisty, cigar-smoking Tandy, an outgoing, fast-talking extrovert who 
loved to sell, and the stolid, conservative Hinckley, who knew the mer- 
chandise and liked to buy. Standing about 5-8 and never weighing more 
than 150 pounds, Dave Tandy, in his later years, with his wire-rimmed 
glasses, bow ties and double-breasted suits, would become a dead-ring- 
er for President Harry Truman. 

Early on, Hinckley and Tandy found their respective niches in the 
business, with Tandy as "Mr. Outside" and Hinckley as "Mr. Inside." 
the two naa Decome rnenas wmie working together in the shoe- 
findings department of Padgett Brothers, a major Dallas leather house, 
Hinckley, a Dallas native six years older than Tandy, had worked his 
way up to manager of the shoe-findings department after a number of 
years as a traveling salesman calling on shoe repair shops. 



START ON A SHOE STRING 9 

Dave Tandy's father, A.N. Tandy, was a successful farmer, shipping 
his vegetables in crates that featured a big T trademark. Dave Tandy 
grew up on his father's farm in Brownsville in the Rio Grande Valley, 
hating the long hours and backbreaking work. He wasted no time leav- 
ing the farm after graduating from high school, and eventually wound 
up in Temple, a central Texas town between Waco and Austin, where 
he landed a job as a salesman in a shoe store. One day he sold a pair of 
shoes to a local girl, Carmen McClain. It was love at first sight. They 
were married in Temple on July 8, 1914. 

"How could I help falling in love with Carmen?" Dave recalled in a 
newspaper interview on their 50th wedding anniversary. "She was the 
prettiest girl I ever did see." 

Dave was earning 20 cents an hour and working a 70-hour week 
when he got married. There was no income tax. "When the income tax 
went into effect in 1917, we screamed that the government was robbing 
us," he often recalled. "The tax was 1 percent." 

Dave and Carmen had just returned from their honeymoon in 
Galveston when disaster struck. The shoe store where he was working 
went out of business. Times were tough in Temple and job opportuni- 
ties nonexistent. Dave decided to try his luck in Dallas. There, he 
learned of an opening for a salesman in the shoe-findings department of 
Padgett Brothers. Much as he disliked the thought of going on the road, 
he applied for the job and was hired. His immediate supervisor was 
Norton Hinckley. 

Tandy sold shoe-findings on the road for Padgett until the United 
States entered World War I in 1917. When his brothers, Cleve and 
Clyde, were drafted, he responded to his father's call and returned to 
the family farm as their wartime replacement. He was exempt from 
military service because by now he was the father of 2-year-old daugh- 
ter, Margueritte. A second child, a boy, would be born on May 15, 
1918, while Dave and Carmen were still living on the family farm in 
Brownsville. He would be named Charles David. 

Dave remained working for his father until his brothers came home 
from the war. When the Armistice was signed on November 11, 1918, 
Dave began looking forward to leaving the farm and getting back into 
the leather business. 

His hopes were answered through a fortuitous encounter with Norton 
Hinckley on a street in Dallas in early 1919. Dave was in Dallas trying 



10 START ON A SHOE STRING 

to collect some overdue vegetable accounts for his father when he ran 
into Hinckley. The two hadn't seen each other in nearly two years and 
had a lot of catching up to do. Over a cup of coffee in a nearby cafe, 
Tandy told Hinckley about his desire to get back into the leather busi- 
ness and asked about his chances of returning to his job at Padgett 
Brothers. 

Hinckley had another idea. He wanted to go into business for himself. 
Now he asked Tandy if he'd be interested in joining him. He had been 
looking into the matter for some time and he believed that Fort Worth 
was the place to locate. There were no shoe-findings houses there, 
whereas Dallas already had five or six. Tandy was intrigued. 

"How much will it take?" he asked. 

"How much have you got?" Hinckley answered. 

"I've got $5,000 in the bank," Tandy informed his partner-to-be. 

Dave had learned the importance of saving money from his father, 
who had taught him as a boy to start putting 50 cents a week in the 
bank. He had followed his father's advice and had, over the years, dili- 
gently put away 10 percent of everything he made. 

'Til match your $5,000," Hinckley said. "With $10,000, we'll have 
enough to get started." 

They found an affordable store with a glass front in a one-story brick 
building at 1607 Houston Street on the lower end of downtown Fort 
Worth. The shop contained about 2,500 square feet of floor space that 
included a small office in the rear. In spite of the high hopes of the two 
fledgling entrepreneurs, the Hinckley-Tandy Leather Company got off 
to an inauspicious start. 

"They had a fire after only six months in business that nearly finished 
them," Norton Hinckley's son, Douglas N. Hinckley of Dallas, report- 
ed. "Starting up the new business was a strain. They were always 
strapped for cash." 

Fort Worth, when Hinckley and Tandy set up shop in 1919, was in 
the midst of a postwar boom. Already known as a "cowtown" because 
of the many livestock and meatpacking businesses, Fort Worth was 
now experiencing another major boost to its economy: oil. in ivn, 
cowboys on the W.T. Waggoner Ranch near Wichita Falls struck oil 
while drilling a water well. Fort Worth was the nearest major city to the 
new oil field, and by 1912 two oil refineries had been built there. In 
1917, wildcatters operating out of Fort Worth hit the jackpot with the 



START ON A SHOE STRING H 

discovery of a vast new oil field at Ranger. A year later, rich oil depos- 
its were found at Desdemona and Burkburnett. 

Fort Worth became a major center of the emerging petroleum indus- 
try. Thousands of people jammed into the city. New companies were 
born daily. By 1919, eight refineries were operating there and produc- 
ing more than 50,000 barrels of oil per day. The tax value of property in 
the city more than doubled, surpassing $100 million and the population 
topped 100,000 for the first time. There were 12 banks in town with to- 
tal deposits of more than $80 million and a downtown building boom 
that would continue through the 1920s. 

Other factors also contributed to Fort Worth's growth. A major mili- 
tary installation, Camp Bowie, was built in Fort Worth, and became the 
home of the storied 36th Division that performed so valiantly in France. 
Three military airfields were located in and around the city. Norton 
Hinckley and Dave Tandy made the most of the atmosphere. At first 
they divided up their business responsibilities. Hinckley called on shoe 
repair shops in Fort Worth and Tandy worked the neighboring cities 
and towns. As the business grew, they began hiring salesmen and both 
became full-time managers, Tandy concentrating on sales and Hinckley 
on buying. 

"They were a good pair. They were congenial," Doug Hinckley re- 
called. "Dave was a talker, always with a cigar in his mouth. Dad was a 
quiet person." 

In 1923, with the business now on a firmer footing, Hinckley-Tandy 
Leather Company moved to a new location in larger quarters in a 
three-story, turn-of-the-century building at 1600 Throckmorton Street, 
at the southwest corner of 15th Street. It was only a block away from 
the original site and was still in the heart of one of the tougher parts of 
town, only a few blocks away from an area that had been known as 
"Hell's Half Acre" during the great cattle drives of the 1870s and '80s. 
Fort Worth then had been the last stopping-off point on the Chisholm 
Trail, where cowboys could wet their whistles and enjoy some female 
companionship before driving their herds of Longhorns across the Red 
River into Indian Territory on the way to Dodge City and the other 
Kansas railheads. 

"It was tough country," recalled Archie Wayman, who had worked 
for the Cook Paint & Varnish Company store at 229 West 15th Street 
in the mid- 1920s. "You didn't go down there much after dark. The rail- 



12 START ON A SHOE STRING 

road tracks were right behind us. A guy was running on the street late 
one night and ran into two policemen. They began running with him. 
One of the cops said, 'If a tough guy like you is running, we'd better 
run, too.'" 

Throckmorton was a brick street and Hinckley-Tandy was a store 
front, Wayman remembered. Next door was the Wagner Supply Com- 
pany, an oil field supply house, and next to it was the Harlow Cone 
Company, which made ice cream cones. The Cook Paint & Varnish 
store was located between Throckmorton Street and the Jennings Ave- 
nue Viaduct. Burrus Mills was nearby. Across the street was a black- 
smith shop, which was still making horseshoes, although most of its 
business was industrial machinery. On a shelf above the anvil, one of 
the blacksmiths kept a half-gallon jug of corn whiskey out of which he 
sipped all day long. His breath was frequently as fiery as his forge. On 
the opposite corner of 15th and Throckmorton was a salvage store 
owned by E.C. Dayton. 

Wayman remembered Dave Tandy as "the front guy with his cigar, 
while Hinckley stayed in the back. Hinckley did the buying and Dave 
did the selling. Dave was always busy on some committee of the Rota- 
ry Club or the Chamber of Commerce or the Sales Executives Club. He 
was nervous, never could sit still, just the opposite of Hinckley. He was 
a classy little guy, dressed real well, always wore a bow tie." 

It didn't take long for the effervescent Tandy to carve out a niche for 
himself on the local business scene. He joined the Rotary Club of Fort 
Worth in 1921, became a director and would earn the distinction of 
having 34 years of perfect attendance. He was a vice president and di- 
rector of the Fort Worth Chamber of Commerce and led many trade trip 
delegations across the state extolling the virtues of Fort Worth as a good 
place in which to do business. He was one of the organizers and the 
first president of the Fort Worth Sales Executives Club and one of the 
early promoters of the city as a site for sales meetings and conventions. 
He served as president of the Manufacturers and Wholesalers Associa- 
tion just before it merged with the Chamber of Commerce in 1927. 

In 1924, Dave Tandy chaired a committee that staged a rally tor 
1,000 traveling salesmen to demonstrate the city's growing manufactur- 
ing, wholesaling, retailing, and industrial capabilities. The Fort Worth 
Star-Telegram called him "one of the most wide-awake businessmen of 
the city, whose interests in Fort Worth are not limited to personal gain." 



START ON A SHOE STRING 13 

He also had a prescient eye to the future. In July 1927, he was quoted 
in the Star-Telegram, "Air transportation is still in its infancy, so much 
so that it is hard to imagine how greatly it can be developed. I wasn't 
sold on air as a means of practical transportation until recently when I 
studied it in connection with the proposed mail route to South Texas. I 
am convinced now that its possibilities are unlimited." On December 
19, 1928, Tandy took his first airplane ride, a short hop around Fort 
Worth in the company of 11 other directors of the Chamber of 
Commerce. 

Hinckley-Tandy opened its first branch store in Beaumont in 1927 in 
an effort to tap into the growing Gulf Coast market. But by 1932, in the 
depths of the Depression, the store was closed, never having lived up to 
expectations. Dave Tandy then offered Jim West, who had joined the 
company two years earlier as manager of south Texas operations in 
Houston, the chance to open a new store there. West, who would one 
day become the president of Tandy Corporation, accepted the 
challenge. 

West had grown up in Corning, Iowa, and had received his early edu- 
cation in a one-room country sehoolhouse. After graduating from high 
school, he enrolled in Grinnell College, a small liberal arts school in 
Iowa, on a mathematics scholarship. 

"I never took a course in math that I didn't get a top grade in," West 
would later recall, "but I failed to graduate because I ran out of money." 

Later, he attended the St. Louis University School of Commerce 
while working for the Chicago, Burlington & Quincy Railroad, and 
then went to work for the Fulton Bag and Cotton Company. He was liv- 
ing in St. Louis when Charles A. Lindbergh made aviation history with 
the first transatlantic solo flight in "The Spirit of St. Louis" in 1927. 
The entire city turned out to welcome Lindbergh when he made a tri- 
umphant return to St. Louis. The Fulton Bag and Cotton Company gave 
its employees the day off, which West put to good use by answering a 
help wanted ad by the Seiberling Rubber Company. Seiberling was 
looking for a sales representative in Fort Worth and West got the job. 
In Fort Worth, one of the first people West met was Dave Tandy, 
whose company was the state distributor for Seiberling products. 

"I sold rubber heels to Hinckley-Tandy," West was quoted in a news- 
paper interview shortly before his death. "Goodyear had almost a mo- 
nopoly on rubber heels, but Seiberling's heels didn't mark floors when 



14 START ON A SHOE STRING 

you walked on them. With that advantage, Seiherling eventually got 
half the sales in the state." 

In 1930, Tandy hired West and sent him to Houston to oversee 
Hinckley-Tandy's operations in south Texas. 

"Dave knew that I knew how to sell and that I wasn't afraid of hard 
work," West later recalled. "After all, I'd already been selling him rub- 
ber heels." 

Eunice West met her future husband in St. Louis while she was going 
to secretarial school and Jim was attending St. Louis University. She 
and West were married shortly after he moved to Houston. It was a 
union that was predestined, she said with a laugh. "My maiden name 
was East, so we proved the twain could meet." 

She recalled how hard Jim worked in those days. 

"He managed the store in Houston and also delivered merchandise to 
customers in the area. He was both on the road and inside. He had to do 
it all. It was just a very plain store, downtown on Caroline Street. In 
those days, it was a findings business, and Jim sold leathers for soles 
and heels and shoelaces and shoe polish. The customers were from all 
around. They would come in on Sunday and buy from Jim. AH of the 
shoe shops in Houston were customers. Those early days were awful. 
There was nothing very prosperous about them. It was just a lot of hard 
work. Jim went to work at 7 o'clock and it was usually 9 or 9:30 when 
he got home. 

"I used to go with him sometimes when he'd go on trips. He'd leave 
on one day and come back the next, going to Goosecreek and Baytown 
and those suburban areas and Galveston. We'd stay overnight in 
Galveston because it was a resort. But a lot of times Jim would be in 
those shoe shops until late at night. He'd deliver their orders to them. 
We had a Ford coupe and it'd be full, chock full, of merchandise, and 
we'd stop at all these individual shoe shops. The owners, of course, 
worked late because most of them lived in the back of the shop. We'd 
go in and Jim would stand around sometimes until 10 o'clock because 
they'd be busy and he'd have to wait until they could see him. He'd 
stay around to collect because tney would pay a little Dit at a time on 
their account." 

West was lucky if he could collect anything from his customers in 
those early 1930s days when a hole in the sole of one's shoe was a 
symbol of the times. While Al Jolson sang, "Brother, can you spare a 



START ON A SHOE STRING 15 

dime," there weren't many people around who could spare one. West 
struggled to keep his store in Houston going. 

Back in Fort Worth Dave Tandy and Norton Hinckley, like so many 
other small businessmen of the time, resorted to some creative mea- 
sures to keep their struggling enterprise afloat. Tandy told a story of the 
time the business had two invoices that it couldn't pay. "What we did," 
he related with a sheepish grin, "was send a check made out to the 
ABC Company to the XYZ Company, and the XYZ Company check to 
the ABC Company. It took about two weeks for them to get the checks 
back, and by then we had enough money to cover them." 

Hinckley-Tandy nearly went belly-up in 1937. It bought too much 
merchandise on credit and lacked funds to pay. Dave Tandy saved the 
day by going to each of the suppliers, pointing out that if they forced 
Hinckley-Tandy into bankruptcy, they'd get nothing. But if they would 
give the firm six to 12 months, they could sell the merchandise and pay 
their bills. He convinced them that the the merchandise was saleable, 
that Hinckley-Tandy had just bought more than they could sell right 
then. 

But even when things were at their bleakest, when the stock market 
was hitting all-time lows and unemployment all-time highs, Dave 
Tandy, ever the optimist, was making speeches at sales meetings 
around the state exhorting people to keep their chins up. A news item in 
the Star-Telegram declared; "Selling in spite of the Depression through 
the use of modern packages will be discussed by Dave L. Tandy, presi- 
dent and sales manager of Hinckley-Tandy Leather Company, at the 
second annual Southwestern Sales Managers Conference at the Baker 
Hotel in Dallas. Tandy will outline the evolution of the package from 
the 'ugly duckling' stage to the present when it is being used to turn 
sales curves upward." 

Dave Tandy also offered a Depression-era marketing tip to the shoe 
repair industry that was published in a trade journal: "In the present 
phase of merchandising, we find that psychology is playing a greater 
part than ever before. The salesman, the advertiser, the manager, all are 
using more psychology today than ever before. Therefore, we would 
like to submit to you for your careful study a slight change in the 
present universally used slogan by the shoe repair shops, 
namely, — 'Shoes Repaired While You Wait.' We believe better psy- 
chology would be to use — 'Shoes Repaired While You REST,' chang- 



16 START ON A SHOE STRING 

ing the word 'wait' to the word 'rest'. People today are living in a 
hurry. They do not like to wait for trains, for shoes to he repaired, or 
anything. But when they are tired, they might take a suggestion to 
REST. Anyway we pass this on to you, and would be glad to know 
what you think of the matter." 

During the 1930s, Dave Tandy became known as a public speaker 
on leather lore. He developed a traveling road show he called the 
"Romance in Leather," and he became a sort of Paladin of the lecture 
circuit: "Have Speech, Will Travel." 

A 1939 story in the Star-Telegram told of a talk Tandy made to the 
Rotary Club in Brownsville, Texas, at which he displayed 60 pounds of 
cow hides and horse hides, plus goat, sheep, lamb, reptile, alligator, 
shark, and walrus hides. 

In his remarks Tandy informed his fellow Rotarians that their area 
had "a wonderful opportunity for a very profitable industry in catching 
sharks for commercial purposes, because shark skin cannot be imitated 
successfully and is valuable." He also gave an account of what hap- 
pened to the ostrich after the styles in women's hats changed and os- 
trich feathers were no longer in vogue. 

"It became necessary to find some other use for the ostriches that had 
been maintained for their feathers," Tandy reported. "Then someone 
discovered that the ostrich, when killed and skinned, furnished a very 
fine leather that was very hard to imitate successfully. The birds be- 
came so valuable for their leather that in a very short time all of the os- 
triches in the United States had been used and we began to import 
ostrich hides from Australia. A law there prohibits the killing of the os- 
trich for its skin alone, but it was found that the meat made a very fine 
'Wimpy Special.' Now the meat is used there, while the hides are 
shipped to the United States." 

Hinckley-Taridy's struggle for survival continued until the outbreak 
of World War II. The Japanese attack on Pearl Harbor that plunged the 
United States into the war had an immediate impact on the 
country — and the company. The problem now was not selling the mer- 
chandise, Dut finding tne merchandise to seii. 

Leather had become vital to the war effort, and the government soon 
was taking almost all of the available leather. There was virtually none 
left over for civilian use. However, specialty leathers soon began to be 



START ON A SHOE STRING 17 

utilized by the armed forces for therapeutic leathercraft programs in 
military hospitals and in recreation and rehabilitation centers. 

Dave Tandy found he could get a priority for providing the armed 
forces with specialty leathers, which worked very nicely for tooling 
belts, billfolds, handbags and similar items. As the war progressed, the 
specialty leather business continued to grow. This was Dave Tandy's 
bailiwick because it was outside of Norton Hinckley's area of interest 
and expertise. 

For the first time, Tandy began to recognize the potential of leather- 
crafts for the future of the business. Hinckley, on the other hand, 
thought leathercrafts was a fad that would die with the end of the war. 

Neither recognized it at the time, but the path to a split-up of the 
company had been charted. 

* * * 

The family that Dave Tandy moved to Fort Worth in 1919 consisted 
of his wife, Carmen; their two children, Margueritte and Charles; and 
Carmen's mother, Olive Anne McClain. Another son, Alfred R. (Bill) 
Tandy was born in Fort Worth on August 19, 1921. Dave soon had 
Carmen and his mother-in-law selling shoe polish and shoelaces door to 
door. The family initially lived in a small house at 2240 Alston on the 
city's non-fashionable south side until the summer of 1929, when it 
moved into a comfortable, two-story brick home that Tandy built at 
1916 Berkeley Court in one of the city's upwardly mobile areas. 

Charles Tandy and his sister and brother grew up in a strict Southern 
Baptist home that was dominated by his mother. "She really made them 
toe the line," recalled Eunice West. "Dave Tandy just let her take 
over. He let her do it all, as far as the home and the children were 
concerned." 

Dave Tandy joined the Presbyterian Church after a tent meeting in 
Temple, but Carmen remained a staunch Southern Baptist and raised 
the three children in that faith. They attended Broadway Baptist 
Church, and it was there that Luther Henderson first met Charles 
Tandy. Charles was 12 and Luther was 10. 

"Our mothers were good friends through the church," Henderson re- 
called. "Charles lived on Berkeley Court and I lived on Park Hill, so we 
were neighbors and got to be good friends. After we got a little older, 
we didn't find Sunday School classes too interesting. But we both 



18 START ON A SHOE STRING 

wound up in the department for high school age people where there 
were a lot of pretty girls around. We did that for two or three years and 
thoroughly enjoyed it." 

Charles' grandmother, Olive Anne McClain, whom he called "Mother 
Mac," had grown up in a very strict Baptist tradition. "She was strongly 
against smoking and drinking, both of which Dave Tandy did, and this 
was a source of irritation between them that never died out," Luther 
Henderson said. 

According to Henderson, when Charles was about 14 or 15, his 
grandmother promised him a car if he neither smoked nor drank until 
he was 21. Charles accepted the challenge and, to the best of Hender- 
son's knowledge, lived up to the agreement. 

"His grandmother did give him a car," Henderson said. "I think, 
though, that by the time Charles was 21 and one week he'd more than 
made up for all that lost time. That's when he started smoking his ci- 
gars that became his trademark." 

Charles grew up in a world that was bounded by how far a boy could 
roller skate or ride a bicycle, another boyhood friend, Phil R. North, re- 
membered. North lived only a few houses away from Tandy when they 
were growing up. 

"Charles and I were the same age. His birthday was May 15 and mine 
was July 6, so we played together from the time we met," North said. 
"The games we played were what we and the other neighborhood kids 
could devise — shinny in the street, kick the tin can, touch football on a 
vacant lot, baseball where there were two vacant lots together, digging 
a cave in a vacant lot, building a clubhouse out of abandoned lumber, 
counting the cars as they came by and seeing who could correctly iden- 
tify them by make and model year. 

"At night during the summer in those days, we didn't have much to 
do," North related. "We'd sit around outside because there was no air- 
conditioning. We'd sit on the front sidewalk because it was cooler. 
We'd sit out there and talk and watch the fireflies. We'd try to catch the 
fireflies and put them in a bottle. And we'd talk about whether it would 
be possible to ever make $10,000 a year. Both ui us thought n was vciy 
unlikely that we'd ever achieve such success, but it was something to 
dream about. Neither of us had any clear idea of how we could amass 
this fortune. When you're 10 or 11 years old, the business world seems 
very far away. It's very vague to you. A boy at that age can imagine be- 
ing a doctor, or a lawyer, or a professional baseball player. He can have 



START ON A SHOE STRING 19 

clear aspirations as to what he wants to be at that age, but you don't 
think about having a business. I didn't know what I was going to do 
and neither did Charles." 

Although North's father was editor of the Fort Worth Star-Telegram, 
the city's dominant newspaper, he and Charles delivered the Fort Worth 
Press, an upstart afternoon paper owned by the Scripps-Howard chain, 
after school. They also sold the Saturday Evening Post and other maga- 
zines for additional pocket money. 

"Our families were comfortable, in that we had nice homes and a 
family car," North said. "It wasn't customary to give children vast al- 
lowances. I think mine was 25 cents a week and I suspect Charles' was 
the same or less. And that's when we were in high school." 

North recalled that Charles Tandy first displayed his aptitude for 
salesmanship when he was about 10 years old and attending the Dag- 
gett Elementary School on Fort Worth's south side. 

"Charles took leather scraps from his father's shoe-findings store and 
taught the kids how to make quirts and belts out of them. I think he 
sold two leather strips for a dime. The strips were about a yard long." 

Tandy and North also engaged in a joint business venture, operating a 
punchboard during school recess. 

"We charged the kids a nickel or a dime to punch our punchboards. 
You could win a nickel, a dime, a quarter, 50 cents or a dollar with one 
punch," North related. "We bought the boards from Herman Brothers 
Supply for 15 cents, and if we sold the whole board we would net 
$1.15, less the cost of the board, which gave us a whole dollar profit." 

The Depression-era summer of 1936 provided a special set of memo- 
ries for everyone lucky enough to be living in Fort Worth. It was the 
summer of Casa Manana, the show business extravaganza mounted by 
Fort Worth to upstage Dallas which had been chosen as the site of the 
Texas centennial celebration. 

Billy Rose, the pint-sized showman from Broadway, was lured to 
Fort Worth for the then unheard of fee of $1,000 a day to produce the 
spectacle that featured a Sally Rand Nude Ranch, a lavish stage show 
headlined by Paul Whiteman and his Orchestra, bevies of beautiful 
girls, and spectacular scenery and costumes. Across the state billboards 
proclaimed, "Dallas for Education. Fort Worth for Entertainment." 

For the 18-year-old Charles Tandy and Phil North, Casa Manana pro- 
vided an idyllic summer of romance and enterprise. "In that Casa 
Manana show," Phil North remembered, "there was one number that 



20 START ON A SHOE STRING 

had 50 chorus girls in it wearing gold cowboy boots. There were 55 
chorus girls in all, with five having the night off every night. Charles 
and I contracted to regild the five pairs of gold cowboy boots that 
weren't in use each night, for $5 a pair. We were 18, and that was as 
much money as we'd ever seen. We also got to meet every single one 
of the chorus girls." 

Slot machines were legal at Casa Manana that summer. Since North 
and Tandy had to deliver the regilded boots to the dressing room before 
each performance, they had about two hours to kill before they could 
pick up the boots of the five girls who would not be performing the fol- 
lowing evening. 

"So we'd go over to Pioneer Palace, where the slot machines were," 
North recounted. "We'd take a dollar in nickels and dimes with us and 
carefully survey the slot machine scene to see which machines were go- 
ing for 100 percent profit. We'd stand behind old ladies and watch them 
put their nickels and dimes in the machines, and then we'd decide 
which machine to play that night. We never lost more than a dollar and 
we never won more than a dollar because we quit after we won a dollar. 
We were never greed)/. Then, when the last show was over, we'd pick 
up the five pairs of boots and take them home to regild." 

Another business venture in which Charles Tandy engaged as a teen- 
ager was making ladies' belts. His partner was John Justin, Jr., whose 
family bootmaking name is as much a part of Western lore as are Stet- 
son and Colt. The Justin Boot Company's brand dates back to the sto- 
ried days of the old cattle drives, when John Justin's grandfather, HJ. 
Justin, began making handmade boots for cowboys in a Chisholm Trail 
town called Spanish Fort. 

"I first knew Charlie Tandy when my father moved the family boot 
business to Fort Worth from Nocona in 1925," John Justin recalled. "I 
was 7 years old at the time, the same age as Charles. We kind of grew 
up running into each other. Charlie's dad, Dave Tandy, took a very ac- 
tive part in the Sales Executives Club and so did my dad. So I knew 
Charlie through that, too. We'd see each other at meetings we'd go to 

• ,1 1 1 ,.. T~\^ . jl\ jlI „ — ^.4. 4-**. "U* ™l% nn,U/\^1 /" >, t-*n-**1< at urnn * ror-* t in_ 

terested in making some money, and so was I. Our fathers were rather 
frugal with us, and Charlie kept coming up with ideas for putting a little 
more change in our pockets. It was his idea for us to go into the ladies' 
belt business together. 



START ON A SHOE STRING 21 

"He said to me, 'You've got a lot of scrap leather over at your fa- 
ther's boot factory. Why don't we use it to make belts and sell them to 
the department stores downtown?' 

"At first, I didn't think too much of the idea, but he kept talking 
about it until I finally agreed. This was when both of us were in high 
school I found an old hand-mounted, 16-pound mallet that they used 
for cutting out dies at the boot factory. And we bought a die. It was 
kind of an oblong-shaped die with the comers cut off and had four 
holes, two at each end. I'd bring all this heavy scrap leather home from 
the boot factory and we'd go out to my garage. I lived -on Medford 
Court in Park Hill, not too far away from where Charlie lived. 

"So we'd get in there, in my garage, and we'd start pounding that die 
with the 16-pound mallet, cutting out belts in the shapes we wanted. 
We'd place the die on the piece of leather and pound on it. One of us 
would hit that thing until our arm would just give out. Then the other 
guy would begin to hit. If you didn't hit the die hard enough with the 
mallet, it wouldn't cut through the leather, and you'd have to hit it 
again. Charlie and I sometimes stayed in my garage damn near all night 
knocking those belts out, particularly when we had orders. He liked to 
work. We worked nights because we were going to school." 

Justin laughed when he recalled the scene. 

"When we were grinding out those belts, the sweat just rolled off us. 
You take that big old 16-pound mallet and beat that die, and you're 
talking about exercise. We'd just do it until we'd give out." 

They used an old burning needle to burn borders around the belts and 
to decorate them, usually by burning in brands from a book of cattle 
brands they had acquired. Finally, they got to where they put their own 
designs on their products, things like backward Ls. 

"I think that's one of the ways Charlie got interested in leathercrafts," 
Justin said. 

They sold their belts to department stores and specialty shops and did 
a pretty thriving business. "We were getting a buck or two apiece and 
they were selling for around $4 in the stores," Justin remembered. 
"And, pretty soon, it got to where you'd see a lot of them around town. 
Women were wearing them as a sort of novelty-type thing, because the 
belts came without buckles. What we'd do is buy some strip leather and 
put it through the holes at each end of the belt. You'd just tie the belts 
in front instead of using a buckle. 



22 START ON A SHOE STRING 

"We had a nice little business while it lasted" Justin continued. "The 
leather was free from scraps we collected at the boot company and 
the labor was free. We never were able to use scrap leather from 
Charles' father's business because we needed heavier leather than what 
Hinckley-Tandy had." 

Justin remembered the Hinckley-Tandy Leather Company as a small, 
struggling business that "did everything in the world" to try to sell 
leather to his family's boot company. 

"But even in those days, my father was buying 100 times more leath- 
er than Hinckley-Tandy ever stocked/' Justin said. "So there just wasn't 
any room for the middleman. The boot company was buying direct 
from the tanneries." 

In later years, after Tandy and Justin returned home from sea duty 
during World War II, they talked about joining forces again, Justin 
revealed. 

"Charlie was fascinated by the boot business, and he would call me 
periodically about buying the boot company. But I didn't own the com- 
pany then and there was nothing I could do about it. Then, when I got 
the boot company, he called me a time or two, but it just never worked 
out and we just never got together. I probably made a bad mistake. I 
probably could have made a lot of money if I'd sold the business to 
Charlie for Tandy stock." 

No one in Fort Worth ever dreamed that Tandy would become a 
"great entrepreneur," Justin said. But it was apparent to those who 
knew him that the Hinckley-Tandy Leather Company would never sat- 
isfy his ambitions or his ego. 

"Charles always wanted to get into something big," Justin reported. 
"He was always looking for something that would match his imagina- 
tion and his talents. He wanted to sell, to build a retailing empire. Once 
he got started, there was nothing to stop him." 

He would have to wait until after the war to make his start. 



Chapter 2 

Building a Business in Peace 

and War 



Tandy was already on active duty in the U.S. Navy when the bombs 
began falling on Pearl Harbor. In the spring of 1941, with the war 
clouds becoming more ominous, the Navy offered direct commissions 
to students attending the Harvard Business School. He applied, was ac- 
cepted, and was commissioned an ensign in the Regular Navy after 
agreeing to a 6-year commitment. 

He was called to active duty although he had not completed the re- 
quirements for his MBA. He hoped the business school would award 
him the degree under the extenuating circumstances, but it was never 
forthcoming. This colored his opinion of Harvard MBAs forever after. 
Tandy applied to the Harvard Business School after his graduation from 
Texas Christian University in 1940, but he was turned down. He was 
determined to go there, however, even if it meant pulling a few strings. 
The strings were pulled by his grandmother, Olive Anne McClain, who 
had grown up in Bonharn, Texas, with Speaker of the House Sam Ray- 
burn, one of the most powerful men in Washington. 

"Charles' grandmother got Sam Rayburn to write a letter to the Har- 
vard Business School on Charles' behalf," Luther Henderson reported. 
"That's how he got in." 

Charles Tandy's college career started inauspiciously. He flunked out 
of the prestigious Rice Institute in Houston in his freshman year. Tandy 
later said that flunking out of Rice was the best thing that ever hap- 
pened to him because it taught him that he had to study rather than 
spend all his time chasing coeds. He then enrolled at Texas Christian 
University in Fort Worth. TCU would remain close to his heart for the 
rest of his life. 

"Charles was always more interested in girls than in academics," 
Henderson maintained. "Academic subjects never really interested him. 

23 



24 BUILDING A BUSINESS IN PEACE AND WAR 

He just did enough to get by. It was only after he graduated from TCU 
that he became interested in preparing himself for a business career." 

While at TCU, Tandy worked as a salesman in the ladies' shoe de- 
partment of Monnig's Department Store in downtown Fort Worth. He 
initially worked for his father at Hinckley-Tandy Leather Company, but 
he found selling ladies' shoes far more rewarding. Not only was he was 
on a commission at Monnig's rather than on the minimal fixed salary 
his father had paid him, but selling shoes was a great way to meet at- 
tractive young women. 

"Charles was always a good salesman," Henderson said, "so he had 
an above-average income for a college student in those days." 

Elton M. Hyder, Jr., a prominent Fort Worth attorney and one of 
Charles' closest friends, remembered Tandy saying, "A man ain't worth 
a damn unless he's sold ladies' shoes. If you can sell ladies' shoes, you 
can sell anything." 

Tandy was able to put his shoe-selling experience to immediate use 
when he entered the Harvard Business School, landing a job in the la- 
dies' shoe department of the Jordan Marsh Department Store in Boston. 

Reminiscing about his Harvard experience in later years, Tandy de- 
scribed his first year there as one of the hardest of his life, and he fre- 
quently recalled the two lonely Christmases he spent on the deserted 
campus because he couldn't afford to go home for the holidays. "It was 
horrible," he said. 

During Tandy's second year at Harvard, he only took courses that in- 
terested him. "I didn't have to worry because they don't wash you out 
until the end of the year," he told Bill Vance, a former Tandy Leather 
Company associate. "So I said to myself, 'The hell with their schedule 
and the courses they want me to take. I'm picking my own courses and 
I'm picking the ones that fit exactly with what I want to do.'" 

Vance called this "one of the smartest things that Charles ever did, 
because he was able to concentrate on financial subjects taught by peo- 
ple with the best financial minds, and Charles had a mind like a sponge. 
He just drank it all in." 

Fhil North added, "Unaries enjoyea mrvara. He enjoyed the people 
there. He <*ot out of it what he wanted. But he never regretted not get- 
ting his MBA. What you had in your head or in your heart was what 
was important. If he had a degree from Oxford or was a don, he'd never 
tell people. He'd never have worn a Phi Beta Kappa key had he won 



BUILDING A BUSINESS IN PEACE AND WAR 25 

one. Charles' lack of a diploma from Harvard and flunking out of Rice 
were merit badges in his book." 

Tandy's first assignment with the Navy after being called to active 
duty was selling war bonds in Hawaii. In 1942, while still an ensign, he 
sold $1,179,637.50 in war bonds, a record for war bond issuing offices 
nationwide. He concentrated his sales efforts on civilians holding 
draft-exempt jobs in Navy shipyards. 

It was during his tour of duty in Hawaii that he became aware of the 
therapeutic and recreational applications of leathercrafts in Navy hospi- 
tals. He wrote to Dave Tandy about what he had seen, suggesting that 
leathercraft might offer an opportunity for the expansion of Hinckley- 
Tandy's business after the war. 

Tandy's next assignment took him to sea as a supply officer on an oil 
tanker, the USS Pecos, in the Pacific. William W. Collins, who had 
grown up with Tandy in Fort Worth and later became a Radio Shack 
executive, recalled an experience that took place in heavy seas off the 
Aleutian Islands shortly after the Battle of Midway. 

"Charles was on an oil tanker that came up to the Aleutians to refuel 
our task force. I was a junior engineering officer on the heavy cruiser, 
the Indianapolis, in charge of one of the diesel fuel connections. The 
seas were rough and it was a really dangerous situation. These were big 
ships and they were bobbing up and down. Charles knew I was on the 
Indianapolis, and he knew that I had no way of knowing that he was on 
the Pecos. 

"So Tandy got on the bullhorn and called out for everyone to hear, 
'All right, Collins, get off your dead ass and hurry up and make that 
diesel connection.' 

"I heard that voice across the roaring seas, and I could see that the 
captain on the bridge of the Indianapolis heard it, too. The hose was 
still about 20 feet out, and I got word from the captain, 'Collins, I want 
you to make haste with that diesel connection. You heard that supply 
officer over there on the tanker saying things are going too slow.' I an- 
swered, 'Yes, captain, sir.' 

"Then I looked over at the tanker and I recognized Tandy. He was 
doubled over laughing. He thought that was the funniest thing, because 
I'd gotten my ass eaten out by the captain of my ship. That happened 
right off Kiska, and there were a lot of German submarines around, and 
we needed the fuel." 



26 BUILDrNG A BUSINESS rN PEACE AND WAR 

Collins added a postscript to the Aleutian incident. 

"Just after i joined Radio Shack, I was working in the store m down- 
town Dallas to learn the business. Charles came over to the store one 
evening. I didn't even know he was there. We were busy, it being 
Christmas time, and we were selling these little bullhorns. Charles went 
over to a corner of the store, got one of the bullhorns out and said, 'All 
right, Collins, get off your butt and hurry up and make that sale.' I'll 
tell you, he thought that was funny as hell, too." 

After a tour of sea duty, Tandy was one of about 100 officers accept- 
ed to attend the Naval Accounting School at Harvard. Luther Hender- 
son, a naval officer then stationed in the Aleutian Islands, also applied 
for the Accounting School assignment and was accepted. 

"You can imagine our mutual surprise when we ran into each other 
on the Harvard campus," Henderson said. "We immediately signed up 
to room together." As it turned out, they became roommates, but not in 
the Harvard dormitory to which they were assigned. 

"Charles knew a family in Boston, the Meyers, who were in the 
leather tanning business and had done business with Hinckley-Tandy," 
Henderson recounted, "So Charles called Mr. Meyers, and when he 
learned that Charles was stationed at Harvard, he invited him to live at 
his home and bring a friend. So Charles and I moved into the Meyers' 
home. We went to school from 9 to 4 and the rest of the time we were 
on our own. The Meyers really made us a part of their family, intro- 
duced us to lots of people. Since there was a shortage of men, we got 
invited to lots of parties, met lots of pretty girls. After that, we went to 
separate duty stations and didn't see each other again until after the war 
was over. Charles stayed in the Navy for about a year after the war end- 
ed because of his six-year Regular Navy commitment. He spent the 
year in the States working primarily on disposal of war surplus 
equipment." 

Tandy chafed under that extra year of active duty while his peers 
were getting started on their postwar careers. When he got out in 1947, 
he was a man in a hurry. The war had taken six years out of his life and 

V»/-» lio/"^ <"* Irvf - r\-r r*r%4-n>V\ truer nr\ "frv nr\ 

He came back from the war with a wife, the former Gwendolyn 
Purdy Johnston, an attractive, vivacious, and wealthy widow. She and 
Charles had been married in Seattle on October 25, 1945, after a whirl- 
wind courtship. He was 27 and she was 41 and the mother of an 18- 



BUILDING A BUSINESS IN PEACE AND WAR 27 

year-old daughter and a 15-year-old son. Gwen had been widowed 
eight years earlier when her husband, Sherwood Johnston, was killed in 
a plane crash. Johnston was the scion of a wealthy family with exten- 
sive holdings in Mexico, including a sugar plantation and sugar refiner- 
ies in Los Mochos, among other interests. The family maintained 
estates in Burlingame, California, near San Francisco, and Rye, New 
York, plus homes in Cuernavaca and Mexico City. 

Charles and Gwen met while he was stationed in San Francisco. They 
were introduced by Gwen's daughter, Connie, a freshman at Stanford 
University and a volunteer driver for the Red Cross assigned to the 
Navy. She met Charles when he was escorting a group of admirals in a 
staff car driven by Connie. One of the staff car's tires suffered a blow- 
out. Taking advantage of the privileges of rank, the admirals watched 
while the young woman got out of the car to change the tire. Charles, 
who was then a lieutenant, offered his assistance even though it meant 
soiling his sparkling Navy whites. Connie was so grateful, she invited 
the chivalrous young officer to her home in Burlingame, where he met 
Gwen. 

Hazel Vernon of Fort Worth, who was living in the Bay Area at the 
time with her Navy husband and was a close friend of Gwen 
Johnston's, remembered when Charles came to call for the first time. 

"It was a Sunday afternoon at Gwen's beautiful home in Burlingame. 
We had just finished lunch at the Burlingame Country Club and had 
come back to the house to have a swim when Charles arrived. He was 
smoking a cigar at least a foot long and I could hear him talking up a 
storm to a group of young ladies. He was really something. I wondered, 
who is that brash young man?" 

Mrs. Vernon asked Tandy what he was going to do after the war, 
and he said, "I'm going back to Fort Worth and put my family's busi- 
ness on the map. I'm going to make us all millionaires, my father, my 
brother, and my sister." 

Gwen and Charles began dating and were married shortly after Tandy 
was transferred to Seattle in October of 1945. Mrs. Vernon, who later 
moved to Fort Worth where she became a successful realtor, acted as a 
"baby-sitter" for Connie and her brother, Sherwood, while Gwen was in 
Seattle for the nuptials. 

When Gwen and Charles arrived in Fort Worth in 1947 following his 
separation from the service, they set up light housekeeping in a small 



28 BUILDING A BUSINESS IN PEACE AND WAR 

apartment without air-conditioning and other amenities near the TCU 
campus. The experience provided Gwen with a severe case of culture 
shock. Not only had her lifestyle changed drastically, but her adjust- 
ment wasn't helped at all by the 12 to 14-hour days Charles began put- 
ting in at the Hinckley-Tandy Leather Company. 

"Hours didn't mean a thing to Charles," Eunice West said. "He 
worked from early morning until, a lot of times, 9 or 10 o'clock at 
night. Charles would stay down there after they closed the store. I know 
Gwen would get so provoked. She'd call me and ask, 'Is Jim home 
yet?' And I'd say, 'No.' And she'd say, 'I wonder where they are?' and 
I'd say, 'They're down there someplace.'" 

Bill Collins remembered the day Gwen and Charles arrived in Fort 
Worth upon his return from the service. "They drove up to my house in 
a Duesenberg roadster that Gwen owned and there was this big dog 
standing up in the back seat. It was like something out of The Great 
Gatsby." Harlan Swain, who began working for the Hinckley-Tandy 
Leather Company in 1942, found that Tandy lost no time making his 
presence felt upon his return to work. 

"After Charles came back into the business, life became pretty much 
hell for everybody, so to speak. I thought he was real hard in those 
days. That was before I got to know him for what he really was, which 
was a warm, big-hearted, totally unselfish person. But he didn't come 
across that way at first. He was very impatient. But he could see exact- 
ly where the future lay. At the beginning, when he couldn't get people 
to see what he saw, it was very, very frustrating for him. He was hard, 
tough, demanding, and profane." 

Swain recalled an incident in which he felt he was victimized by 
Tandy's apparent lack of sensitivity to other people's feelings. It hap- 
pened shortly after Charles' arrival on the scene and was something 
Swain said he never forgot. A great-uncle of his had died and he had 
asked Dave Tandy for time off to attend the funeral because the great- 
uncle had been especially close to Swain's mother. 

"Charles found out about it and was furious," Swain reported. "He 
didn't think I should have taken off to attend a tuneral tor a great-uncle. 
He said to me, 'I had a chicken once that died and I didn't take time off 
from work.' In retrospect, I can hardly believe that he really said that, 
but it has subconsciously stayed with me over all these years. I know 



BUILDING A BUSINESS IN PEACE AND WAR 29 

now, and I got to believe later, that he really wasn't that insensitive. 
But, I guess, that was the one thing above all others that doomed me to 
a life of intimidation at the hands of Charles Tandy." 

Swain paused for a moment as if composing his thoughts, then added, 
"You know, Winston Churchill once said, 'Never have so many owed 
so much to so few.' Well, I'd say about Charles Tandy, 'never has any- 
body accomplished so much with so little.' By that I mean he took ordi- 
nary people like myself, people with humble backgrounds and not 
much education, and by dint of his tremendous energy and determina- 
tion, flogged us into doing more than we thought we could do. I'm ab- 
solutely convinced that there is no one that could have done what he 
did with the people that he did it with. Not that he picked dumb people. 
I don't mean that. I mean that he picked ordinary people, and by the 
unselfish remuneration plans that he devised and by the judicious use of 
the cat-o'-nine-tails, he accomplished miracles." 

Swain recalled how in later years Tandy accompanied him and other 
employees to the Fort Worth National Bank, "hat in hand, so to speak, 
so that we could borrow money to invest in our stores and to buy 
Tandy stock, and a lot of us became millionaires because of that. It's 
unbelievable that it could happen. But it happened because of Charles 
Tandy. To build an empire as he did, it was just phenomenal." 

Swain began working as a stock boy at Hinckley-Tandy Leather 
Company in September of 1942, right after high school graduation, at a 
starting wage of 30 cents an hour. He had learned about the Hinckley- 
Tandy job opening at the Texas Employment Commission Office in 
downtown Fort Worth and had been instructed to talk to a Mr. D. L. 
Tandy, 

He recalled his meeting with Dave Tandy. 

"He was very animated, very energetic, and had a cigar in his mouth. 
He talked with me for a while, then excused himself and went over and 
got Mr. Hinckley. He and Mr. Hinckley conferred and then Mr. Tandy 
came back and told me I was hired." 

Hinckley-Tandy' s business was still shoe findings, supplying shoe re- 
pairmen with all of their needs, including the machinery they utilized. 

"Of course at that time, shoe repairing was a pretty big thing, much 
more so than it is today," Swain said. "People got their shoes repaired 
and kept them until they wore them out. Hinckley-Tandy had three 



30 BUILDING A BUSINESS IN PEACE AND WAR 

salesmen working out of Fort Worth, covering west Texas, east Texas, 
north Texas, and southern Oklahoma. We also did some mail order 
business. The shoe repairmen would mail in their orders for their fill-in 
needs in-between calls by the salesmen, but generally you had to call 
on the shoe repair men personally to maintain their business; not only 
to retain their business, but to see that they paid. There were three kinds 
of customers: those that would and could pay their bills, those who 
would pay but couldn't, and those who could pay but wouldn't. The ef- 
fect was the same with each of the latter two. You didn't get your mon- 
ey. But our company had good credit, paid its bills, and was always 
properly financed to conduct the kind of business it was doing." 

All new employees started out on the packing table, packing mer- 
chandise for shipment, Swain said. "Then, after you accumulated 
knowledge of the merchandise, you got to be an order filler, the guy 
who went around with a clipboard filling orders. Then there were the 
shipping clerks who, after the orders were filled and packed, had to 
know which truck lines went where, and whether the package should 
go by truck or railway express or parcel post. 

"Ml Hinckley was strictly a shoe findings man," Swain continued. 
"He was in charge of buying and inventory control for everything ex- 
cept what we called the upper leathers, which were mostly calfskin and 
kangaroo skins from which the upper parts of boots and shoes were 
made. The customers for upper leathers were custom bootmakers and 
shoemakers. Mr. Tandy handled that phase of the business. But he was 
principally an outside man, a salesman, an outgoing, extroverted fel- 
low. He also handled the advertising and the merchandising for the 
whole business." 

The Hinckley and Tandy division of labor apparently worked, Swain 
decided. "They got along pretty well, although, on occasions, you could 
hear their voices raised. Mr. Hinckley was a quiet man. He never 
had much to do with directing the employees. Mr. Tandy did all that 
sort of thing, and with all of his nervous energy he could keep things 
stirred up. Mr. Hinckley represented a sort of quiet, stabilizing 

influence." 

After Charles Tandy's return from the Navy, Hinckley-Tandy began a 
modest expansion program, opening new stores in Amarillo, Dallas, 
and Albuquerque, which necessitated hiring some part-time help. One 
of those applying for a job was Bill Michero, a newly-returned Navy 



BUILDING A BUSINESS IN PEACE AND WAR SI 

veteran, who needed to augment his GI Bill stipend while he finished 
work toward his degree in business at TCU. 

"It was in December of 1947," Michero recalled. "I spotted a 3»by-5 
card tacked on the wall of the business school that invited part-time job 
applicants. So I drove my 1932 Reo to this place in the seedy end of 
downtown near the wino district at 15th and Throckmorton Streets, 
where I eventually found the headquarters of the Hinckley-Tandy 
Leather Company. 

"The building was a typical, crummy pre- World War I structure, sort 
of oblong-shaped, four floors, including a basement. The back of it and 
the freight doors faced on Lancaster. Two blocks east was the Richelieu 
Grill, which had been down there for years since the advent of the rail- 
road. The freight elevator had this giant, 6-foot diameter wheel that was 
pulled by rope, and if you overloaded it the brake failed and everything 
would go to the basement. It was a pretty primitive environment." 

Michero was interviewed first by Charles Tandy, then by Dave Tandy 
before they hired him at $1.10 an hour, which was 10 or 15 cents above 
the minimum wage at the time. Michero began working in January of 
1948 filling orders in the warehouse, helping in the shipping depart- 
ment, wrapping packages, and servicing mail order customers. 

"By the time I got there," Michero related, "a good part of the sales 
were coming from customers who were not shoe repair people, but 
people who were doing other things. Some advertising pieces were be- 
ing done and some modest little homemade mailing pieces were being 
produced and aimed at this new market for leather. Dave Tandy created 
these little advertising and mailing pieces on his kitchen table." 

Another Navy veteran, Bill Vance, who spent the war as a medic on a 
small water tanker in the South Pacific, had also returned home and en- 
rolled in the TCU School of Business. He had just gotten married and 
had mentioned to one of his professors that he was looking for a job. 
The professor referred him to the Hinckley-Tandy Leather Company 

"The building it's in looks like it's about to cave in," the professor 
told Vance, "but there's a young man there who impresses me no end. I 
think, if he can get some help, he can do something with the business. 
His name is Charles Tandy You ought to go and talk to him." 

A few days later, on a Saturday afternoon, Vance drove downtown to 
answer a Burroughs Business Machine Company want ad only to dis- 
cover the office was closed. Getting back into his car, he began driving 



32 BUILDING A BUSINESS rN PEACE AND WAR 

south. At the corner of 15th and Throckmorton Streets, he saw a sign 
that said, "Hinckley-Tandy Leather Company" on an "old, yellow stuc- 
co building," and he remembered his conversation with the professor. 
Parking his car in front of the building, Vance went inside to be greeted 
by a less than inviting setting. 

'Tm not kidding," he avowed, "I actually walked through some cob- 
webs going in. I walked up two or three little steps and came to a little 
wall at the back of the room. Then I turned left and that put me in the 
office. Just a couple of lights were on. At least it was pretty dim in 
there. I couldn't see anybody and I couldn't hear anybody. But the door 
was open and I said to myself, There's gotta be someone here.' So I 
walked in and then I saw two big feet sticking out from under a desk 
and I figured there had to be a body somewhere under those feet. So I 
said, 'Hello.' The feet kind of rustled and then I saw a big guy about 6 
feet 2 and 200 pounds pushing himself out from underneath the desk, 
looking up at me with a big smile on his face and saying, 'Hi, what can 
I do for you?'" 

That was Bill Vance's introduction to Charles Tandy. 

Vance told Tandy he was looking for a job and Tandy said, "Come in 
and let's talk." He explained that he'd been lying on the floor plugging 
in a new IBM electric typewriter. "I want to see what it can do," he 
added. 

"We began talking," Vance said, "and then Charles asked me if I 
minded working on Sunday. By this time it was 4 o'clock on Saturday 
afternoon. I answered, T don't like to work on Sunday. I worked on 
Sunday when I worked in a restaurant. But if the ox is in the ditch, I'm 
more than happy to get him out.'" 

Tandy replied, "Well, we've got a big ox in the ditch. How about 7 
o'clock tomorrow morning?" 

The job was installing fixtures Tandy had bought from a friend who 
made knockdown furniture and fixtures. The fixtures were cheaply 
made and didn't fit very well, but Tandy wanted them installed to make 
racks for a shipment of western belts that had just arrived. Vance and 

m * r» • i -f,i «i i j ft 5.i--i„n ji ^:^i_x nrt. — \r ■» 

lclIIUy imiSiJLCU UIO JUU dUUUt I V tslOviv uuiiuaj n^m. invn 'uiiw 

brought up the subject of permanent employment. 

"Charles said they really didn't have a spot open, but would I be will- 
ing to work for $25 a week to find out if I fitted in somewhere? I told 
him I would if I could start in the bookkeeping department. When he 
asked me why the bookkeeping department, I told him that was the best 



BUILDING A BUSINESS IN PEACE AND WAR 33 

place to learn the business. He nodded his head and said, 1 guess that 
makes sense.' He told me to report for work the following morning for 
a week's tryout." 

The head bookkeeper, Bush Jones, wasn't particularly happy to see 
Vance, informing him that there was really nothing for him to do. But 
after a while Jones reappeared and said, "Here's a statement from the 
Albuquerque bank that's wrong. I don't know what's wrong with it, but 
you find out." Vance discovered that the bank had made a $10 error in 
its favor. The next day the young woman who did the invoices called in 
sick, so Vance sat down at her desk and did the billing. Then he got his 
big break. The man who did the pricing became ill and was hospitalized 
in the Veterans Administration Hospital in Dallas. It was his job to 
check the catalog when the orders came in and price all the orders. 
Vance was assigned that task. 

"Dave Tandy began warming up to me when I began pricing," Vance 
said. "He gave me half a day to see how I was doing and checked up on 
me. Since he did the buying of the upper leathers, he was familiar with 
the upper leather prices. When he didn't find any mistakes in my pric- 
ing he went back to his desk. I worked that way all week without being 
told whether I'd been hired permanently or not." 

On Friday night near quitting time Vance approached Charles, who 
told him, "Let's go see Dad." They found Dave Tandy in a receptive 
mood. "I guess so," he said when Charles asked him if Vance was 
hired. "What I didn't know," Vance added, "is that Dave had just found 
out his pricer was going to be laid up in the hospital for three months." 

The relationship between Dave and Charles Tandy was frequently 
stormy. Both had a propensity to giving vent to their feelings and didn't 
mind being overheard. "They'd yell at each other, but they also really 
liked each other. It was that kind of a fun ball game. Everybody used to 
yell at each other," Michero reported. 

But there was also a lot of mutual respect. 

Charles Tandy often said that he learned more about business from 
his father than he ever did at the Harvard Business School. 

"My dad probably taught me the biggest part of the most important 
things I know," he once told Vance. "He always taught me in a simple 
way that was easy to understand," and he gave as an illustration the 
time his father permitted him to buy shoe dye for the first time. 

"He gave me an amount of money to spend and told me I was on my 
own. There were about 25 or so colors available, so I divided them up 



34 BUILDING A BUSINESS FN PEACE AND WAR 

equally and bought 10 bottles of everything. When the shoe dye ar- 
rived, we quickly sold out of two or three of the most popular colors. 
But I had no money left to replace them. I asked my dad where I'd 
gone wrong." 

"'Charles/ Dad said, 'I've never considered myself an expert inven- 
tory man, but I have learned this over the years. When you look at that 
dye and you find out what you're selling, you'll find that you sell about 
20 bottles of white to every bottle of purple. Now, if you're gonna run 
out of a color, which one would you rather run out of?' Then dad 
asked, 'How many sales would you miss if you were out of purple for a 
month?' I told him, 'Maybe none.' Then he asked me, 'How many 
sales would you lose if you were out of white for a month?' I never for- 
got that conversation. To this day, when I'm thinking about inventory, I 
always ask myself if I have enough white dye or too much purple?'" 

By early 1948, Hinckley-Tandy had stores in Dallas, Amarillo, Albu- 
querque, and Houston, in addition to Fort Worth, and a small catalog 
business. 

Vance and Charles Tandy used to drink coffee together at 10 o'clock 
every morning at the Texas & Pacific Passenger Depot across Lancaster 
Avenue from the Hinckley-Tandy offices. They always talked business. 
"Charles wasn't interested in gossip or sports," Vance said. "We'd 
spend about 15 minutes talking and Charles was always full of ideas. 
Charles always wanted to set sales goals, but they really weren't goals. 
They were more like hopes. Our annual sales then were about 
$750,000. Charles would say, T hope that sometime we can build it up 
to $5 million.'" 

Vance was the 14th person hired by Hinckley-Tandy in Fort Worth. 
The work was hard, Vance recalled, but it had one redeeming feature. It 
was steady. No one ever was let go. 

"Dave and Charles didn't like to fire anybody" Vance explained. 
"The only person they ever fired, they caught him stealing one Sunday 
when they came down to do some extra work, They didn't have any 
choice. Then they went home and moped about it. Charles' mother told 
me, *L>ave cant fire anyone and neifner can Charles. They bark buu 
they don't bite.'" 

There was also a special feeling about the place, Bill Michero re- 
membered. "I started out with the company at 23," he explained. "I 
knew it was a small organization, but we were doing a little more busi- 



BUILDING A BUSINESS IN PEACE AND WAR 35 

ness each month. The ambience and atmosphere were crappy, and I 
knew that all of my classmates were making the same money that I was 
with a lot less effort, but it was fun to be there even though I was work- 
ing my fanny to a frazzle. Perhaps it was Charles and Dave and the oth- 
er guys, but you had the feeling you were a part of a team that was 
building something. In a short while I had seen the evolution out of the 
staid shoe-findings business into a new, interesting direction. Sure there 
were those who didn't find it all that great. They went on to work 
somewhere else. It was a self-screening environment." 

# * * 

Hinckley-Tandy's leathercraft business, begun as a wartime sideline, 
began to expand after Charles Tandy's return. 

"There were a lot of servicemen coming back home wounded and in- 
capacitated in varying degrees and they were placed in Veterans hospi- 
tals for treatment and rehabilitation," Harlan Swain reported. "The 
occupational therapists, looking for things to help them occupy their 
time and get back some of their confidence, found that working with 
leather had a great deal of therapeutic value." In addition, leathercraft 
provided an opportunity for people to augment their incomes because 
the finished products possessed genuine value. 

"Dave Tandy initially recognized the possibilities of leathercraft, but 
the aggressive pursuit of it as a business came from Charles," Michero 
asserted. "Dave had 30 years in the business and knew the merchan- 
dise. Charles didn't know the merchandise that well, but he was keenly 
aware of what was happening in the marketplace, and he was con- 
vinced that a large, untapped market existed for leathercrafts. So the 
combination worked out pretty well. Charles and Dave admired each 
other very much, and Dave deferred to Charles when he kept insisting 
the future of the business lay in leathercrafts and not in shoe findings." 

Luther Henderson recalled, "When Charles returned from the Navy, 
he didn't take a line job in the family business. He was a general all- 
around person. He was trying to find a way to make the business grow. 
He thought in terms of having a little better, a little bigger, a little nicer 
place for people to go to have their shoes repaired. He thought very se- 
riously about this and was trying to find locations and things like that. 
But he never actually tried it. The next phase of the story is that he did 
begin to get interested in the leathercraft side of the business and he re- 
alized the difference in the amount of gross profit it was contributing in 



36 BUILDING A BUSINESS IN PEACE AND WAR 

relation to the sales volume. The shoe-findings business was so com- 
petitive, with pretty tight gross margins and a lot of expenses. It operat- 
ed on a gross margin of 25 percent, while the leathercrafts gross 
margins were at the virtually unheard of rate of 38 percent to 39 
percent." 

The split-up of Hinckley-Tandy was inevitable. Norton Hinckley, a 
dyed-in-the-wool shoe-findings man, saw no future in leathercrafts. 
Charles Tandy wanted the company to spend all of its resources in 
building up leathercrafts. Norton felt that Charles was an opinionated, 
pushy young man whose talk about creating a nationwide chain of 
leathercrafts stores was a pipe dream. 

Dave Tandy was "a reluctant recruit" to the leathercrafts side of the 
business, Henderson opined. "I think if he'd been given a free vote, 
he'd probably have voted against the split-up with Hinckley. But be- 
cause Charles did have this enthusiasm, and the fact that Charles could 
marshal some pretty good arguments, Dave agreed to the proposition." 

Charles Tandy held firmly to his beliefs, as he explained in a talk at 
Brigham Young University in 1973. " After I had been in my father's 
business for about a year-and-a-lialf, doing my best in research and 
study, I came to the conclusion that the only thing that looked as if it 
was worthwhile was leathercraft," he revealed. "This was doing about 
$300,000 a year in sales at that time. Shoe repair supplies were running, 
maybe, a million dollars. We were making a living and that was all. I 
knew from observing other types of businesses around the world that 
there had to be a better way. There had to be more opportunities. I had 
studied enough to know that there was another way, and that we had to 
find it" 

The beginning of the parting of the ways came at a special meeting of 
the board of directors of the Hinckley-Tandy Leather Company in the 
company offices at 1600 Throckmorton Street on May 31, 1949. 
Norton Hinckley and Dave Tandy were present as the firm's directors 
and stockholders. Also in attendance were Douglas N. Hinckley, 
Charles D. Tandy, and James L. West. Norton Hinckley, acting as 
chairman, announced thai ihe purpose of the meeting was 10 consider 
"a feasible plan of departmentalized operations," 

Dave Tandy, acting as secretary, reported that the company was oper- 
ating a wholesale, retail and mail order business with two distinct class- 
es of merchandise: shoe findings and upper leathers. "Under the system 
of operation presently used," Tandy stated, "it cannot be determined the 



BUILDING A BUSINESS IN PEACE AND WAR 37 

amount of profit made from each class of business." He cited an exam- 
ple from the operating results of the year ended May 31, 1949, com- 
pared to the previous year's operations. "Sales of $535,362 in the prior 
year provided a net profit of $21,959, while sales of $578,798 in the 
year just ended produced a loss of $1,012. It cannot be determined from 
the present method of operations which class of business produced 
profits or losses. For this reason, it is necessary that the business be 
departmentalized." 

The minutes of the meeting declared, "After much discussion, it was 
resolved that the business shall be divided into two departments, one 
department to be described as the shoe-findings department, the other 
to be described as the upper leather department, effective for the fiscal 
year beginning June 1, 1949, and ending May 31, 1950. The net assets 
of the company shall be divided between the two departments in a man- 
ner sufficient to meet the requirements of the plan, and each department 
shall maintain a complete set of books and shall account for all busi- 
ness transactions of every kind and character, shall render monthly op- 
erating statements and shall maintain separate bank accounts." 

Norton and Douglas Hinckley were named operators and managers of 
the shoe-findings department, which would occupy three floors of the 
building at a rental of $225 per month. As an incentive, it was stipu- 
lated they would receive, in addition to their salaries, a bonus equal to 
25 percent of the net profits of their department after income taxes 
were prorated. 

Dave and Charles Tandy were named operators and managers of the 
upper leather department, which would occupy two floors of the build- 
ing at a rental of $150 per month. They, too, received an incentive bo- 
nus of 25 percent of their net profits after taxes. 

Bill Michero recalled the separation. "We physically separated the in- 
ventories of the upper leather and the shoe-findings departments. The 
upper leather department later became our leather business. We split 
the building and we allocated the people. There were about 13 of us 
working there. There were about 45,000 square feet in the building, 
roughly 15,000 on each of the three floors. So the physical separation 
was made, and this group of employees stayed with the shoe-findings 
business and this group stayed with the upper leathers." 

The separation agreement lasted for nearly a year, but it soon became 
apparent that a divorce was inevitable as the two entities drew farther 
apart. The official end of Hinckley-Tandy Leather Company came on 



38 BUILDING A BUSINESS IN PEACE AND WAR 

March 31, 1950, when a final settlement was consummated. Dave 
Tandy agreed to pay Norton Hinckley $155,848, half in cash and half 
in promissory notes, for the Hinckley-Tandy operations in Fort Worth, 
Houston, Amarillo, and Albuquerque. The notes totaling $78,588 were 
secured by a lien on property owned by Dave Tandy in Fort Worth, and 
were payable in three annual installments of $26,196, due April 1, 1951 
through April 1, 1953. 

Hinckley retained the Dallas shoe-findings operation, for which he 
agreed to pay Dave and Charles Tandy $14,918. He was joined in the 
business by his son, Douglas Hinckley. Norton Hinckley maintained his 
home in Fort Worth after the split, and commuted to Dallas by car. He 
died in Fort Worth on October 14, 1964, at the age of 83. 

The Tandy Leather Company was established on May 31, 1950, with 
about a dozen investors, with Charles and Dave Tandy holding the ma- 
jority ownership. Other original investors included Bill Tandy, Jim 
West, Bill Michero, Bill Vance, and Harlan Swain. 

The Tandy Leather Company took over the premises at 1600 Throck- 
morton. It would remain there until 1952, when it moved 13 blocks 
north to a new location at 2nd and Throckmorton streets, an area of 
downtown Fort Worth that would 26 years later become a part of the 
Tandy Center. 

A new era was about to unfold, with Charles Tandy firmly in the 
driver's seat. 



Chapter 3 

Tandy Leather Company 
Spreads Its Wings 



The move of the Tandy Leather Company to 2nd and Throckmorton 
Streets satisfied the growing company's need for larger quarters, but it 
also was a manifestation of Charles Tandy's longing to improve the 
firm's public image and establish his own. 

Dave Tandy, despite his involvement in the Chamber of Commerce, 
Sales Executives Club, and Rotary, had never been granted entry into 
the Fort Worth power structure dominated by the big downtown banks, 
utilities, law firms, oil companies, and monied families. So to Charles 
the trek uptown to a location across the street from Leonards Depart- 
ment Store, the city's dominant retailing force, represented an upwardly 
mobile step, something akin to a family moving across town to the 
"right" side of the tracks. 

The new home of Tandy Leather Company was a post World War I 
four-story brick building with a glass storefront at street level that stood 
stoically on a 50-foot corner lot amid more imposing structures. The 
Leonards Department Store complex sprawled catty-corner across a full 
city block from the Tandy Leather site. 

On the first floor of the rented premises occupied by the Tandy 
Leather Company was a leather and leathercrafts store, behind which 
was the mail order department. Unfortunately this arrangement meant 
that order fillers were constantly elbowing their way past the customers 
to get to the merchandise on display. The street floor was concrete, but 
the three floors above were of wood that had become impregnated with 
oil over the years. A freight elevator large enough to accommodate a 
good-sized truck served the building. 

The offices were located on the second floor and were wide open, 
devoid of partitions, as they had been at the Hinckley-Tandy Leather 
Company, but now several four-foot planters graced the premises. 

39 



40 TANDY LEATHER COMPANY SPREADS ITS WINGS 

Everyone, however, was still within easy shouting distance of everyone 
else, and there was still no privacy for anyone. Lined up against the 
back wall were the desks belonging to Charles Tandy, Dave Tandy and 
Jim West. 

"You could hear every telephone conversation, every argument," re- 
called Rachel Barber, who began working there in June of 1952. 
"Charles, his father and Mr. West rarely spoke in quiet voices. They re- 
ally enjoyed a good argument with a great deal of shouting. They'd be 
at each other's throats, criticizing each other. Then, at the stroke of 12, 
they'd say, 'Hey, it's time to go to lunch,' and all smiling they'd go out 
together. They picked each other's brains openly. There were no se- 
crets, no intrigue. Everybody knew what was going on. It was wide 
open. I loved it." 

Miss Barber, who would later become director of corporate and 
shareholder relations for Tandy Corporation, was working for the Justin 
Boot Company in advertising, print materials, and communications in 
1952, when a friend advised her that Tandy Leather Company was 
looking for someone with experience in advertising and direct mail. 

She remembered walking through the retail store on the way to her 
first meeting with Charles Tandy and being impressed that it was 
"crammed with merchandise" and "full of customers." Tandy offered 
her a job, but she wasn't sure she wanted to take it. After that, nearly 
every Friday evening, when the store stayed open until 9 o'clock, she 
would drop by and chat with Charles, who was already obsessed with 
his dream of building a nationwide chain of leathercraft stores. Tandy 
finally persuaded her to leave her better paying job at Justin and join 
Tandy Leather at a starting salary of $250 a month. 

"We had a subsidiary called Cardat Leather Goods Company, which 
sold finished manufactured leather goods — belts, billfolds, handbags, 
watchbands primarily," she recalled. "Charles had split the merchandis- 
ing into two parts and he gave me the billfolds and watchbands to ride 
herd on and a man named Don Frazier had the belts and handbags. We 
had catalogs and we sold through retailers and jobbers. We contracted 
for the manufacmring and we did the designing, ihe piujecuuiis, the 
buying, the advertising and the shipping. This was all on the second 
floor. Even the shipping room was on the second floor. They were also 
shipping to all of the Tandy Leather Company stores from the second 
and third floors, and, eventually, they had to have more room. So they 



TANDY LEATHER COMPANY SPREADS ITS WINGS 41 

put the shipping and warehousing for Cardat up on the fourth floor and 
moved accounting to the third floor. They moved me up to the fourth 
floor which had no air-conditioning. It had 24 windows and some big 
fans, but it really got hot up there." 

The heat, however, didn't deter Tandy from coming up to the fourth 
floor for the daily grillings and harangues she suffered at his hands. 
"He would come by asking questions and lecturing and preaching to 
me. With the hours we were keeping, from 7 a.m. to 7 p.m., I was be- 
ginning to get a little weary. And one night, I went up to him and asked 
him, 'Why do you pick on me?' And he answered, 'If I didn't think 
you had it in you, I wouldn't even bother with you.' 

"When he picked on me, it was always about merchandising. He 
taught you by asking questions. He asked you questions and when you 
answered, he piggy-backed on your answer. 'Why is that?' Pretty soon 
you were admitting that you could quadruple sales. He suggested I 
could increase sales by zeroing in on wealthy people in town by com- 
ing up with special designs. He taught me how to figure costs, what my 
profit should be, what I should charge. He spent hours giving me sug- 
gestions and explanations and making me think. He gave me a fantastic 
education. He could be real mean to people, but he was teaching them 
constantly. I appreciated that he didn't care whether you were a woman. 
He treated men and women exactly alike. All he cared about was for 
you to produce. His only concern was sales and profits. You got a P&L 
every month and that's all that counted." 

One of Charles Tandy's first moves after the formation of the Tandy 
Leather Company was to open two retail stores specializing exclusively 
in leathercraft. The pilot stores were located in El Paso and San Anto- 
nio where the company was already enjoying a good mail order busi- 
ness. It was Charles' idea that wherever there were 1,000 catalog 
customers a store could be operated profitably. Bill Healy was named 
manager of the El Paso store and Barney Barnett manager of the San 
Antonio store. 

The stores sold to individuals and institutions, "anybody that was do- 
ing leather work," Bill Michero said. "There were an awful lot of things 
you could make for much less than they would cost you at a retail store, 
particularly ladies' handbags. So lots of people were getting into it." 

The two new stores exceeded even Charles' optimistic forecasts, 
racking up a whopping 100 percent return on investment in their first 



42 TANDY LEATHER COMPANY SPREADS ITS WINGS 

year of operation and bolstering Tandy's conviction that his formula for 
developing a leathercraft chain store operation was sound. 

A major factor in the success of the program was the company cata- 
log. The first one, published in 1950, contained only eight pages. Rob- 
ert R, Lowdon, then a young printing salesman for the Stafford- 
Lowdon Printing Company in Fort Worth, remembered that the first 
Tandy Leather Company catalogs were printed on a multilith press that 
was really too small to do the job. 

"We had the only web press in this part of Texas, so I finally con- 
vinced Dave Tandy to give us the business. This was in the early 
1950s, and by then the number of catalogs they were printing had 
grown to 30,000 and the number of pages to 32. So this represented a 
big order for me." 

Problems arose immediately, however. To hold down costs, Dave 
Tandy made liberal use of illustrations from competitors' catalogs as 
artwork for his catalog, Lowdon learned. 

"If he needed a picture of a mallet, he'd cut it out of a competitor's 
catalog. And if he needed a $17.50 price, he'd go through the catalog 
until he found one. "Then he'd paste four or five of those things down 
on a sheet of paper to make a catalog page. But he always used only 
one drop of rubber cement. T don't want to waste any cement,' he said. 
Well, the first catalog we printed, after he put the pages together using 
one drop of cement, the cement didn't hold. By the time I got back to 
the office, some of the items had shifted around. The $17.50 price tag 
had shifted down to a pair of scissors costing $4.50, and the $4.50 price 
tag had shifted to something else more expensive. So when the catalogs 
came off the press, we had a lot of wrong prices." 

To keep Tandy's goodwill, Lowdon offered to publish a correction 
sheet at Stafford-Lowdon's expense. Corrections were printed on both 
sides of an 8'/2-by-ll-inch sheet of paper that was inserted inside the 
catalog. "We did this rather than having to print the whole 30^000 cata- 
logs over," Lowdon related. "The funny thing is that Mr. landy got 
sonic prices on mat wrong., 100. ^muico icany gwi a ^^^ ,JU * U1 -~- a - * — 
said, 'We're gonna have to put out a correction sheet tor the correction 

sheet.'" 

These catalogs and other direct mail items were not slick, but when 
sent to the right people, they triggered sales. Mailing lists were devel- 
oped by placing small ads in the back of Popular Science magazine and 
by enclosing ads in shipments. 



TANDY LEATHER COMPANY SPREADS ITS WINGS 43 

"Compared to the catalogs you see today, their first catalogs were not 
outstanding/' Luther Henderson said. "But they were a big factor in the 
success of the business because the catalog was the only place where 
people interested in leathercraft could find a source for the different 
supplies they needed to make something out of leather. Prisons became 
big catalog customers for this reason." 

The new stores that were opened in the early 1950s were located near 
prisons that were buying leathercraft materials from Tandy Leather 
Company for their rehabilitation and recreation programs. Leathercraft 
not only gave the prisoners something to do in their spare time, it pro- 
vided them with extra income from the sale of their finished products to 
other prisoners. "Those first stores," Henderson added, "were sort of 
outposts of the mail order business. The stores did mail order as well as 
retail, and in those early years mail order was half or more of the total 
sales volume." 

In 1952, with the mail order business growing rapidly and the num- 
ber of stores mounting, the need for a centralized accounting system 
became acute. 

"Charles had taken accounting courses and had a reasonable knowl- 
edge of bookkeeping and accounting," Henderson noted. "I had ma- 
jored in it and was a CPA. In addition, my family owned the 
Chickasaw Lumber Company which operated a number of branches. I 
had grown up in the business and was familiar with the problems of 
branch store reporting and accounting. So Charles asked me if I'd give 
him a hand." 

Henderson began coming into the office after finishing his day's 
work at the family lumber yard. 

"I tried to set up a better accounting system for Charles and super- 
vised its operation," Henderson recounted. "That's when I first began to 
get familiar with the numbers in his business and saw that the profit po- 
tential appeared to be considerably greater in leathercrafts than in sell- 
ing two-by-fours. Everybody and his brother can sell two-by-fours at a 
very tight margin. Nobody was selling leathercraft. So that's how I got 
started with Charles." 

Tandy Leather Company was now operating eight stores, including 
new outlets in Beaumont, Salt Lake City and Charlotte. The Charlotte 
store, which served prisons in North Carolina and Georgia marked 
the firm's first venture east of the Mississippi. All of the stores were 
company-owned and separately incorporated to take advantage of the 



44 TANDY LEATHER COMPANY SPREADS ITS WINGS 

federal income tax regulation then in effect that exempted the first 
$25,000 of a corporation's earnings. Each store manager had a 25 per- 
cent interest in the venture. 

Charles Tandy would tell his prospective store managers, "If you 
want to manage a store, you won't get much in salary. But I'll guaran- 
tee you 25 percent of the profits if you invest 25 percent of the cost of 
the initial inventory." 

Harlan Swain, who became manager of the Tandy Leather store in 
Fort Worth in 1952, said Tandy was convinced that his investment/ 
compensation plan would form the basis for building a national chain 
of leathercrafts stores. Tandy believed his program would not only mo- 
tivate his store managers but would raise some needed capital as well. 

"If a guy has his own money tied up in a store," Charles told Swain, 
"he's going to work a lot of extra hours, not for you, not for the compa- 
ny, but for himself. Why? Because it's his own money that's at risk. 
And he knows that if he loses it, it's gone for good." 

When it turned out that few, if any, of the aspiring store managers 
had the funds to put up the initial 25 percent investment, Tandy co- 
signed the notes for the store managers at the Fort Worth National 
Bank. The average loan was for about $2,500. 

"This worked very well," Swain said. "Now Charles could really 
hammer on you, not about what you were doing for the company but 
what you were doing for yourself." 

Tandy offered all employees an opportunity to invest in the new 
stores. Rachel Barber remembered that to open a new store usually re- 
quired about $10,000. "Charles would go around the office and collect 
$1,000 here and a $1,000 there. If you didn't have the money, and most 
of us didn't, he'd co-sign a note for you at the bank." 

When he opened the first two leathercraft stores, Tandy worked out a 
formula where they operated with 10 percent less gross profit than he 
was sure his competitors were realizing, Harlan Swain said. 

"rle figured he could regain 5 percent or tnat oy representing tanner- 
ies- but to rente sent tanneries he had to have a tot? salesman out selling. 
That's why he convinced his father tu bring Jim West iv Foil Vvuith 
from Houston, West would be paid $500 per month, but would have to 
sell at least enough leather to pay his salary and his traveling expenses. 
By doing this, however, he would be keeping the tanneries happy, and 
Charles would be getting the 5 percent edge he was seeking. That gave 
Charles some margin to play with. The last thing he put down on his 



TANDY LEATHER COMPANY SPREADS ITS WINGS 45 

original profit and loss pro forma statements was salary. That was the 
one thing he felt he could control You could beat the salaries Charles 
paid on almost every block in town." 

Swain had opened a Tandy Leather store in Dallas in early 1951 and 
was the first manager of the Charlotte store when it opened in Novem- 
ber of 1951. He had borrowed the $3,000 for his 25 percent interest in 
the Charlotte store, with Charles Tandy guaranteeing the note at the 
Fort Worth National Bank. 

"The store managers selected the store sites in those days/' Swain 
said. "What we looked for was a well-known street. It didn't have to be 
a 100 percent retail location. Generally, we were looking for a street 
that was just off the main street, a street that was known, not only to 
everybody in the city itself, but to the whole trade territory. If people 
knew the street, we knew they could find the store. That's the way we 
looked for locations. In San Francisco, where I opened a store in 1953, 
we located our store on Mission Street. Everybody in the Bay Area 
knows where Mission Street is. In Dallas, we located on Pacific Street 
in the heart of the downtown area." 

Kenneth L. Gregson, a former store manager who later became chair- 
man of the board and chief executive officer of Tandycrafts, Inc., re- 
called Charles Tandy's instructions on finding store sites. 

"We want a store in this town. Find a street in town that everybody 
knows, and then keep on walking on that street until you come to where 
we can afford the rent. When you rent the building, here's 10 bucks and 
a bag of nails, and you put the store together. And what petty cash you 
have left over is what you open the store on." 

In Beverly Hills, the Tandy Leather Company store was located on 
Wilshire Boulevard. But, said Gregson, "It wasn't down where people 
think of when they think of Wilshire Boulevard. It was out where we 
could afford the rent." 

In St. Louis, Gregson opened three leather stores on Olive Street. 
"Everybody in St. Louis and everybody coming in from southern Illi- 
nois and northern and southern Missouri knows where Olive Street is," 
he explained. "Sure, they might have to go west a long way on Olive 
Street, but sooner or later they were going to run into one of our 
stores." 

In the fall of 1952, Bill Vance, who had just gotten back from two 
years of recall duty in the Korean War, was getting ready to take over 
management of the Tandy Leather advertising department, when the 



46 TANDY LEATHER COMPANY SPREADS ITS WINGS 

manager of the retail store at 2nd and Throckmorton became ill. 
Charles asked Vance to take over as store manager. Vance recounted 
how Tandy's constant nagging motivated him to break a store sales 
record. 

"Charles was the kind of guy who was always looking over your 
sales and asking, 'Is this the best you can do?'" Vance said. "I think he 
did that about my third or fourth day as a store manager. I hadn't even 
had time to find out what kind of sales we had done. A week or two lat- 
er, Charles again came down to the store and he asked me again, 'Is this 
the best you can do?' I said, 'No, that's not the best I can do.' 

"This was probably about September 1, and I was so steamed up that 
I told him that before the year was over, I'd have at least one $30,000 
sales month. Charles said, 'There's no need to be silly about this. 
You're not going to be able to do $30,000.' Up to then our highest 
month had been about $16,000 in the previous December. But I said, 
'My figure still goes, $30,000.' Charles said, 'Okay, I'll hold you to it.' 
After he left, I asked myself how in the devil I was gonna do it? But we 
went to work, and in November our sales went to $26,000 and in De- 
cember we did $31,000 and something." 

Tandy Leather's business at that time, Vance revealed, wasn't nearly 
as advanced as it eventually became. "We were selling a few kits, but 
mostly it was hides, tools and instruction books, and cutout pieces. And 
we had only two or three instruction books. We still were learning how 
to sell leathercraft." 

But the system was working. The ads were getting results, the inquir- 
ies were coming in, and new stores were being opened. The cycle was 
self-perpetuating: One of the criteria for selecting store locations was 
the number of inquiries received from the immediate area. 

But Charles Tandy was now looking for other ways to grow, and in 
October of 1952 he found a likely candidate in American Handicrafts 
Company, a firm based in East Orange, New Jersey, that would have 
the distinction of becoming Tandy Leather Company's first acquisition. 

"Hpihtc woe thp fl r°.t Ivr* dp.^l Chsrlps 3r?d T worked on ^o nether" Luth.e r 
Henderson recaiied. "American Handicrafts was primarily a mail order 
business that had two retail stores, Charles saw an affinity between 
Tandy Leather and a catalog business selling a full line of crafts and 
leathercrafts. The fact that American Handicrafts was about to go bank- 
rupt was an asset rather than a liability as far as Charles was concerned. 



TANDY LEATHER COMPANY SPREADS ITS WINGS 47 

He thought he could make it profitable." Charles Tandy, Luther Hen- 
derson and Bill Michero flew up to New Jersey to negotiate the pur- 
chase. The owner wanted too high a price, in their estimation, and 
negotiations were about to break down. 

"Charles and I sat around that night and decided what we thought we 
could pay," Henderson recounted. "So I wrote out a proposal on a sheet 
of yellow paper. The next day Charles took it down to this guy and told 
him, 'Here are the terms I'm willing to pay for your business. Take it 
or leave it.' The guy sputtered and fumed, but his back was really 
against the wall. So he took it. It was a fairly complicated deal because 
there were a lot of debts involved. We didn't pay the guy very much, 
about $90,000 in cash, and we absorbed all the liabilities. But his equity 
didn't amount to very much as a result of the debts he owed." 

Bill Michero was tapped by Tandy to return to New Jersey to liqui- 
date the excess inventory and run the American Handicrafts operation. 
Michero by now had gained considerable managerial experience in a 
variety of jobs that had included a stint as credit manager of the Tandy 
Leather operation after the Hinckley-Tandy split-up. His initial assign- 
ment had paired him with Jim West to effect the winding down of the 
accounts receivable. 

"If you can," Michero said, "try to envision the quality of the ac- 
counts receivable of a small, independent shoe repair shop — cobblers 
that Jim West had been selling to all these years. Our task was to clean 
up the receivables. But Jim's task also was to unload a lot of inventory 
that needed to be unloaded. You've got a conflict right there. He's got 
to move all this inventory, but I also want to collect for it. So that was 
my first introduction to Jim West and it was not a pleasant one. I was a 
wet-nosed kid and he was a veteran. It was tough going. I remember 
one account in San Antonio, where we took a horse as payment in lieu 
of cash." 

That was his first introduction, Michero added, to Charles Tandy's 
virtuosity in setting two people to competitive tasks in order to get a 
tough job done. 

In the fall of 1952, Michero and his young family migrated east to 
take over his American Handicrafts duties, moving into a new apart- 
ment complex in Irvington, New Jersey, a suburb of Newark. 

"American Handicrafts had been in business about 20 years, right 
through the Depression," Michero recalled. "It was primarily a mail or- 



48 TANDY LEATHER COMPANY SPREADS ITS WINGS 

der business with schools, hospitals, youth groups and church groups, 
camps and that sort of thing all over the country. It had a general handi- 
crafts line that included sculpture, work with clay and pottery, artwork, 
art supplies, and a range of crafts. About 25 percent of its sales was in 
leathercraft, which was our meat. So it seemed like a decent thing to 
add to our enterprise, one that appeared to be huildable. It also was our 
launching pad for our introducing Tandy Leather stores in the North- 
east. That was one of my collateral tasks. I got five of them opened in 
the nearly two years that I was up there." The American Handicrafts 
warehouse was on Harrison Avenue in East Orange, and one of the 
company's two retail stores was located across the street. The other 
store was on 41st Street off 5th Avenue across the street from the New 
York Public Library in mid-town Manhattan. Initially, the company of- 
fices were located in the warehouse, but in 1953 Michero moved the 
warehouse and the offices to Hoboken. 

In 1954, after Michero had been recalled to Fort Worth, American 
Handicrafts began opening additional stores across the country, con- 
forming to the Tandy Leather Company policy. "They were little 
shops," Michero said, "about 1,500 to 2,000 square feet. As a result of 
that program, we did eventually peak out at about $35 million in sales. 
We ran that business for 30 years," he continued, "but we never were 
able to get it singing like a good violin should. Profitability was uncer- 
tain. One year you'd make a nice profit; but the next year, because of 
the inventory you had to eat, the profit would disappear. And as we 
opened new stores, the catalog and mail order business subsided." 

The American Handicrafts acquisition did result in bringing to Fort 
Worth the Tandy Leather Company's first woman executive, Mary 
Frank. Miss Frank had been serving as American Handicrafts' advertis- 
ing manager in East Orange at the time of its acquisition by Tandy. 
Shortly thereafter she was offered the opportunity of moving to Fort 
Worth to become the advertising manager of Tandy Leather Company. 
She accepted with some trepidation, having never been to Texas and 

w:iv: ~ 1 " J ' 1 1L1 : s - : - *■*-* *■ *■ "" "'•■" "■ "■ *■ ■"■ *"■■""■ " -* ■* ■*■ "■-' "■ ■*■ ■■ " *■'■■■' *■ "" "' ■' ■■ y ''" f ■■■' "■ :: ■"■ ■■" "■ j * " * *■ ' ■■*" ■ ±j '■ ' ' " • i ' ' " 

landy Leather company oriices at zna ana ihrockmonon reinforced 

her doubts. 

"It was in the middle of the night and I had just driven in from East 
Orange," she reported. "It was the first time I'd ever been in Texas. The 
streets were deserted. I pulled up in front of this building and I said to 
myself, 'My God, what have I come to?'" 



TAI<rDY LEATHER COMPANY SPREADS ITS WINGS 49 

In her new position Miss Frank found herself having to deal on a dai- 
ly basis with Dave Tandy, who was then still overseeing advertising 
and merchandising. "The ads we were running were little 2-inch ads in 
magazines selling little baby mocassins for 50 cents," she recounted. 
"They were darling- The inquiries would come in from the ads and 
we'd fill the orders. We advertised in magazines like Work Basket, La- 
dies Home Journal, and Good Housekeeping. This was before you 
could buy ads by specific geographic areas and we'd have 50 to 100 lit- 
tle ads running at a time. We ran little ads because that's all we could 
afford. Mr. Tandy had a simple coding system for his ads that enabled 
him to know immediately which ads pulled and which ones didn't. 
Magazine salesmen would call on him and he had all the answers. Here 
was this little guy in his mid-60s, still sharp as a tack. He'd say, 'Your 
magazine is no good for us."' 

Years later Jim West would nostalgically recall the ads in a speech at 
a Newcomen Society of North America dinner honoring Tandy Corpo- 
ration at the Fort Worth Club on October 29, 1968. 

"Among our first successful ads in 1951 was a 2-inch ad selling baby 
mocs for 50 cents a pair," West recounted. "This was a do-it-yourself 
kit cut from white lambskin. When completed, it became an infant's 
bootsie. Orders poured in. This item sold 3 million pairs in the next five 
years and was the firs* of several thousand unique leather do-it-yourself 
kits. From book marks to full size saddles, these kits formed the solid 
base of the new cotnp an Y an d made the word leathercraft synonymous 
with Tandy across the country. By 1952, sales were $2.9 million." 

Miss Frank, who served as director of corporate relations for Tandy 
Corporation during the 1960s and '70s, recalled those early days at 2nd 
and Throckmorton. 

She remembered one incident in which Jim West demonstrated a 
three-legged chair with a leather seat they called "The Little Buckaroo" 
to Charles and Dave Tandy. "Mr. West was lying flat on the floor with 
his head in the little chair, and Charles and D. L. were standing there 
laughing while I took a picture of it. There was a wonderful spirit in 
that big, old barnlike office. There was no politicking. It was open. We 
worked' hard and we had a good time." 

Charles Tandy even then was demonstrating his "vision and charis- 
ma " she said. "He had dreams. He was always teaching by asking 
questions. 'What were sales last week?' 'What was the percentage of 
gain?' 'What did you spend on such-and-such last week?' 'What did 



5 ® TANDY LEATHER COMPANY SPREADS ITS WINGS 

that cost you?' And you had to know the answers. If you didn't and you 
said, 'I'm not sure/ he'd take the time to give you a lesson. You never 
knew when he was going to come by. 

"You had to have the numbers at your fingertips. One time he came 
by and asked me something and I gave him an answer and he said, 
That's not right.' I said, 'It is right. I'll bet you.' He loved to bet, but 
never a lot. I said, Til bet you a nickel,' and it turned out I was right. 
When he gave me the nickel, I scotch-taped it to the wall, and every 
time he came by my desk he looked at that nickel until he finally won it 
back." 

Tandy never came into the office in a bad mood, she related. "He was 
always full of energy. You could feel it. He always walked fast, and it 
seemed in those days that he always wore the same suit, just like that 
lawyer on TV, Matlock, always the same suit, the jacket never but- 
toned, a neutral-colored suit that was always rumpled. And there was 
always a cigar in his hand. His hair was very black." She also recalled 
the many "knockdown, drag-out fights" that she had with him over the 
years. 

"I was in his office one day when we got into a heated argument, a 
real battle. He read the riot act to me and I lost my temper. I pounded 
my fist on his desk and he pounded the desk right back. I remember 
how much larger his fist was than mine. He hit the desk so hard, papers 
and things flew off onto the floor. I stalked out of his office, figuring 
my career was over. This was on a Friday afternoon. On Monday morn- 
ing, I came to work and began to clean out my desk. Charles leaned 
over the railing from the second floor, where his office was, and said, 
'Miss Frank, why do we have to fight like a pair of Boxer puppies?' 
We talked it over and he gave me a raise. He never held a grudge. 
Rachel Barber and I called him, 'Uncle Dudley' We never went to him 
with personal problems, but if you had a family problem and you need- 
ed help, Charles would be right there." 

i*-«», wv ft uii ^^^6 u^viv xxx a uxAKxy x-/wtttii\*,i v->ujujljj> any upun juci aiiivai 

in Fort Worth. Miss Frank disclosed. "Dave I Tandy loaned several of 

>*,-, <M AAA 4.-. 1 _jl~_1_1 _. fi ■>, i 

^^ 4/i,wv t,v^ kjkxj oiuvjv uwauov wv uiun i nave any money, i was inaK- 

ing all of $300 a month. Mr. Tandy made us the offer and we took him 
up on it. I paid him back over a couple of years. From that point on 
every bonus check I received went for stock. Charles was always urg- 
ing us to buy stock. I used my bonus checks to pay back the loans I 



TANDY LEATHER COMPANY SPREADS ITS WINGS 51 

took out to buy the stock. First it was $5,000, then $10,000. I never got 
to see a bonus check in those days." 

She would later discover that she had this in common with most of 
her colleagues. Over the ensuing years, it would become almost a ritual 
for Tandy managers to succumb to Charles Tandy's exhortations and 
exchange their annual bonus checks for company stock. A great many 
of them would become millionaires as a result. 



Chapter 4 
High Hopes Turn to Frustration 



There was a deep paradox about Tandy's willingness to stake every- 
thing on a business that catered exclusively to leisure time activity, 
something that he found unappealing. He was convinced that there was 
a great and growing market for leathercrafts just waiting for him to tap 
and that by catering to it, he could fashion Tandy Leather Company 
into a vehicle for gratifying his lofty ambitions. 

"What to do with extra time is a problem that hits everyone of us 
sooner or later," he told Harold Monroe, a business writer for the Fort 
Worth Star-Telegram. "We've researched the problem. Handicrafts can 
be completely time- and mind-consuming. This is an immense business 
and people are spending more and more money on it." 

In addition, there were all those millions of people who did nothing 
more than sit aimlessly in front of their television sets all day long. If 
only a small percentage of them could be motivated into working with 
their hands and minds, the payoff could be staggering. 

"How about yourself?" Monroe wanted to know. 

"I'm too busy to have a hobby," Tandy replied. 

Hobbies were for customers, not for him. Making wallets and belts 
out of leather were fine for other people, but he had no time for idle 
pastimes. His job was creating hobbies for others. 

"People respond to the idea of accomplishment after they are shown 
the way," he contended. "This is particularly true when such accom- 
plishment can be a source of pleasure and even extra money for those 
interested in capitalizing on their creative abilities. We've got to show 
them how to do it." 

That he was succeeding was manifested in an article about him in 
The New York Times, in which the writer said that "handicrafts was be- 
coming synonymous with Tandycrafts." 

53 



54 HIGH HOPES TURN TO FRUSTRATION 

This was a heady time for Charles Tandy. He was seeing his optimis- 
tic growth forecasts for his company being realized and surpassed. 
Even Dave Tandy and Jim West had to concede that he was outper- 
forming their expectations. 

Dave Tandy was now in his 60s and beginning to slow down. More 
and more, he was content to let Charles run the show under a loose 
leash that he occasionally still found it necessary to yank. But there was 
no doubt around the company who was now in the driver's seat. One of 
those who got the message was Bill Tandy, who had returned from 
combat duty as a B-26 pilot in Europe and joined the family business 
after the war. 

"This car has only one driver's seat, and I'm sitting in it," Charles 
told Bill upon his return home. 

Three years younger than Charles, Bill Tandy was even larger in stat- 
ure, had an ego that matched his older brother's, was equally ambitious, 
and had a competitive streak just as wide. Finding it difficult to accept 
being in Charles' shadow, he decided to strike out on his own in 1950 
and moved to Tulsa, where he started his own leather business modeled 
after the Tandy Leather Company. 

"I always believed that Dave Tandy used to tell Charles that he'd 
never be the businessman that Bill was," Ken Gregson opined. "I be- 
lieve Dave helped Bill become successful and that he held that up to 
Charles. Charles spent his lifetime wanting Dave to pat him on the 
back, but Dave wouldn't do it. He knew that not patting Charles on the 
back would make Charles drive that much harder. And that was proba- 
bly the reason Charles very rarely patted anyone on the back. There 
was a lot of conflict between the two boys." 

Dave Tandy, who was devoted to both of his sons, found it difficult 
being caught in the middle after Bill started his leather company. But 
although he tried to remain neutral, he would occasionally give Bill a 
helping hand by sneaking copies of the Tandy Leather mailing list to 

t,^*^ P^oJah xtrm^lA l^rt^n r\ F if- anA wTirnKlA pnH (tnimKlp 
Allili. V-aictiAV^d wuuivi itujtu vj>a it aitu umiiiuiv CUava ^imiiuiv. 

A week after Lloyd Redd, who was managing a Tandy Leather store 

^-v ■* . * ,1 111 . . . r _ „X* T7 T>,,—~,~,, 

lit KJLLLittrtX, SClll 111 Uic liaiii^a am* auuitoauo ui a giuup ux x ann i-'^vuu 

women to be added to the mailing list, all of the women on the list re- 
ceived catalogs from Bill Tandy's leather store in Tulsa, Redd reported. 
He complained to Jim West. 

"Blood is thicker than water," West replied dryly. 

The sibling rivalry carried over into competition for store managers. 
John Wilson was teaching vocational leatherwork at Highlands Univer- 



HIGH HOPES TURN TO FRUSTRATION 55 

sity in Las Vegas, New Mexico, when Charles Tandy talked to him 
about joining Tandy Leather Company. When Wilson came down to 
Fort Worth for further discussion, he found that Charles had been 
called out of town on an emergency. At the Tandy Leather offices, Wil- 
son met Bill Tandy, who was in town on one of his frequent visits. 

"Dave Tandy must have told Bill what I was in town for, because he 
began recruiting me to go to work for him," Wilson said. "He talked to 
me all one day and half of the next day, and I flew with him to Tulsa in 
his plane on my way back to New Mexico. I didn't know it at the time 
it happened, but I found out later that Bill and Charles flipped a coin to 
see who was going to hire me. Bill won and I went to work for him in 
his Denver store on August 26, 1951. I remained with Bill until he 
merged his business with Tandy Leather Company in 1955." 

The competition between the Tandy brothers was equally intense out 
in the field. Ken Gregson, who was managing a store for Bill Tandy in 
St. Louis, told of his rivalry with Delbert Harrell, the manager of the 
Tandy Leather Company store in Kansas City. "We spent a lot of time 
trying to steal customers from one another. When the two companies 
merged, it took us two years to bury the hatchet," Gregson said. 

Wilson, Gregson, and Redd shared evocative memories of the 
Charles Tandy of that era. 

"The first time I met Charles was when he came out to Highlands 
University where I was teaching," Wilson recalled. "He walked into the 
shop and I heard him say, 'Where's Wilson?' in a big, loud voice. Then 
I saw this big, brash guy. I didn't know who he was, but my first im- 
pression was that he was an obnoxious son of a bitch. Gwen was with 
him and he insisted that they take my wife and me to lunch. I called my 
wife and she said she couldn't go unless we took the baby with us. The 
baby was maybe a month or so old. So we picked up my wife and baby 
and went to lunch. By the time he left, I'd changed my mind about him. 
He was the kind of guy who was convincing because everything that he 
told you he was going to do came true." 

Gregson added, "He always dreamed big. Back in the leather days, 
when we got together, sometimes with him sitting on a desk and swing- 
ing his legs and some of us sitting on the floor because we didn't have 
enough chairs to go around, we'd sit and dream. He was the leader. 
He'd tell us what we were gonna do, where the sales were gonna go. 
He was setting the pace, pointing the direction, and we were following 
him because we believed in him. Some people called him a bear, said 
heTl tear you to pieces. My thought was that the only thing he'd ever 



56 HIGH HOPES TURN TO FRUSTRATION 

done was try to make better men out of us. Any time he came down on 
you with both feet, he did it to make a point, to help you iearn from 
your mistake. If you took it the wrong way, he could seem unmerciful. 
But I always felt that when he took me apart, laid my guts out on the 
table, he always ended up sewing me back, turning me around, and 
pointing me in the right direction." 

Redd recalled, "Before I joined Tandy Leather Company in the fall of 
1952 as a store manager-trainee in Fort Worth, I talked with Charles for 
about an hour on the phone. He had the ability to paint a beautiful pic- 
ture. He told me they were going to open leathercraft stores all over the 
country and that Harlan Swain, one of their store managers in North 
Carolina, was going to make $10,000 that year. That sounded pretty 
good to me. Charles was already a dominating person, both physically 
and mentally. He had the ability to really inspire you, to make you 
dream, to make you believe that he was going to do everything that he 
said he would." 

Redd remembered one occasion when Charles pounded his fist on the 
table and said, "I intend to be the head of a $15 million corporation 
some day." Well, it wasn't long before that was $50 million, then $100 
million, then $500 million and, finally, $1 billion. But every goal that 
he set, he achieved ahead of time, and then he couldn't understand why 
it took him so long to get there. He was very impatient. He could be ex- 
asperating. He would domineer and browbeat you to the point where 
you did everything you could to prove to him that you weren't as stupid 
as he said you were. But the other side of the coin was that he didn't 
have a selfish bone in his body. He dreamed big, but he made it possi- 
ble for everyone who worked for him to get a piece of the action. He 
loved to put you on some kind of a formula and pay you a bonus based 
on that formula." 

Redd had served a three-month apprenticeship in what had then been 
the Tandy Leather Company warehouse at 2nd and Throckmorton at a 
salar v of 90 cents an hour before ship^in^ out to on en the Omaha store. 
His training, he reported, left something to be desired. "All I did was 

VV V/J.rv IIXVV *,* UVft Ul t,*JtW »T **JL vjiAV Uljv. a aav J w.*m^.,* », »vn ****■ *"*'*'"-./ "~~~~ J "-C2 — *• 

running a store. I didn't know how to do C.O.D.s, or anything." 

At that time, Tandy Leather Company had a policy of issuing a credit 
memo on refunds up to $5. The credit memo could then be used as pay- 
ment on the next order or converted into cash. Just before he left for 



HIGH HOPES TURN TO FRUSTRATION 57 

Omaha, Redd was confronted by Dave Tandy, who pulled a $10 bill out 
of his pocket and asked, "If a customer sends you this $ 10 bill in the 
mail and you ship him $5 worth of merchandise, what are you going to 
do with the other $5?" 

"I'd bill the customer for the $5 worth of merchandise and give him a 
credit memo for $5," Redd replied. 

The answer appeared to upset Dave, who said, "No, no," and began 
shouting at Jim West, "West, West, we're sending these guys out of 
here and they don't know what they're doing." 

West hurried to the scene, closely followed by Charles Tandy, and a 
shouting match ensued among the three, with Redd a bemused and be- 
fuddled bystander. Finally, Charles turned to Redd. 

"Here's the way to do it. First, you take the money," and he took t,he 
$10 bill out of Dave Tandy's hand and put it in his pocket. "Then you 
ship the merchandise and then you write a credit memo. You got it?" 

Charles then strode off, Dave's $10 bill still in his pocket. 

Dave turned to Redd and told him, "I want you boys to know what 
you're doing when you're out on your own. Now, at least, you know 
how to handle a credit memo. It cost me 10 bucks, but it was worth it." 

Like all of the other new store managers, Redd borrowed the $2,500 
that represented his 25 percent interest in the new venture. Just prior to 
his leaving for Omaha, Redd accompanied Charles Tandy to the Fort 
Worth National Bank, where Tandy co-signed his note. 

His salary was $250 a month, but he was guaranteed 25 percent of 
the store's net profit. "That kind of arrangement made it possible for 
Charles to stick people out in the boondocks without much supervision, 
because they had the incentive to make it work," Redd said. "They had 
the incentive, not only to make sales, but to watch everything else, be- 
cause a fourth of all they made was theirs to keep." 

By 1954, Tandy Leather Company had established itself as the na- 
tion's leader in packaging and distributing pre-cut, pre-punched, unas- 
sembled leather kits and as a major distributor of other handicraft 
materials through its 67 retail stores, including six American Handi- 
crafts outlets, in 36 states and the Territory of Hawaii. The company 
catalog was now a 68-page product that was mailed to 1,000,000 cus- 
tomers. Four factories were churning out "U-Do-It" kits for making 
leather handicrafts items such as shoes, handbags, and belts. Sales 
reached $8 million and earnings had grown to $580,000. Distribution 



58 HIGH HOPES TURN TO FRUSTRATION 

center for the far-ranging enterprise was the central warehouse that had 
been opened on Fort Worth's north side in 1954. There, materials were 
received from all over the country and the kits assembled and packaged 
for shipment. 

But, as the company grew and profits mounted, a nagging problem 
began tempering the euphoria of the employee-shareholders who now 
numbered more than 100. It was a problem not at all uncommon in a 
closely-held enterprise. But, in this case, it was magnified by the fact 
that the shareholders owned varying amounts of stock in 67 different 
corporations. This was because each of the 67 stores was a separate 
corporate entity. Bill Michero, for example, had accumulated minor in- 
terests in 30 stores. Most of the shareholders had one thing in 
common — the stock they owned was highly leveraged because they all 
had borrowed the money to buy the shares. 

Some years later, Charles Tandy described the situation that faced 
the company at the time. "We got into a mess with ownership," he re- 
ported. "Anybody who wanted to sell his stock didn't know what price 
to ask for it." 

The situation became increasingly worrisome after Dave Tandy suf- 
fered a severe heart attack in 1954. Bill Vance recalled, "At one point, 
we thought he was gone. And, if he was gone, the company was gone, 
because of the inheritance taxes. We didn't have any cash. Everything 
was in merchandise, equipment, things of that sort. This really scared 
Charles a great deal." 

Vance was managing the Tandy Leather store in Chicago when 
Tandy dropped in for a visit. The two sat up most of the night talking at 
an all-night beanery in the Loop. "We talked about how close we had 
come to losing everything we had worked for, that we'd have had to 
liquidate the company to pay the inheritance taxes on Dave's estate," 
Vance related. "That's when Charles told me that one way to solve the 
problem was for us to get a listing on a stock exchange." 

Bill Michero delineated the dilemma facing the shareholders. "Dave 



ill illilli wilt 1 w til wiilw lit 1111*1*11 dtwll tliw 



would eventually find ourselves in. What was the value of the stock he 
held in Tandy Leather? How do you evaluate it without arguments? 
How do you deal with estates and people's wills? We knew we would 
all ultimately have that same problem. We needed to bundle up our as- 
sorted ownerships, large and small, into a vehicle to provide liquidity." 



HIGH HOPES TURN TO FRUSTRATION 59 

There were two solutions available, Michero added. "One was to take 
the company public. Well, first of all, the company wasn't large enough 
for that and the leather business was a dead horse in the stock market 
for a potential public offering. So Charles began looking for a connec- 
tion that would give us the same result in terms of liquidity and give us 
a market for our stock. The decision he made was either to buy a com- 
pany with a New York Stock Exchange listing or sell Tandy Leather 
Company to a New York Stock Exchange-listed firm which would is- 
sue us its shares in exchange for our Tandy Leather stock." 

Starting in 1954, Luther Henderson related, "Charles began making 
trips to New York to get acquainted with the financial community up 
there, and started looking for companies to buy or sell. We were not big 
enough to buy anything very big. But Charles was a great one to play 
all the angles he could, taxwise. And he soon recognized that if he 
could make a deal with some company that had a substantial tax loss on 
its books, there'd be more money left over for the Tandy Leather share- 
holders than any other vehicle he could create." 

Tandy found the vehicle he was seeking in the American Hide and 
Leather Company of Boston, an old-line New England firm that had 
fallen on hard times. 

He heard about American Hide and Leather from sources on Wall 
Street. He began talking with leather contacts in Boston who steered 
him to the First National Bank of Boston, a major American Hide and 
Leather creditor. The bank was energetically seeking a knight in shining 
armor to take over the failing firm and get the bank off the hook on its 
loan. 

The First National Bank, acting as a matchmaker, set up a meeting 
between Charles Tandy and Stanley M. Rowland, president of Ameri- 
can Hide and Leather, in early 1955. While it was hardly a case of love 
at first sight, the two suitors were immediately intrigued by the fact that 
each party had certain irresistible charms. 

American Hide and Leather was virtually a corporate shell, its total 
operations consisting of two obsolete, money-losing tanneries in the 
Boston area. While the company was not in formal bankruptcy, it was, 
in effect, insolvent, its assets insufficient to pay its liabilities. Sales had 
dropped from $17 million to $9 million over the past four years and it 
had lost over $700,000 the year before. The company had been founded 
in 1899, when the leather business was one of the nation's major indus- 



60 HIGH HOPES TURN TO FRUSTRATION 

tries. Now, it was on its last legs. But it had one asset that Charles 
Tandy coveted — a listing on the New York Stock Exchange that dated 
back to 1935. 

To Stanley Rowland, looking for a way of keeping his company 
afloat, a marriage with the profitable Tandy Leather Company repre- 
sented his last best hope for survival. It now became a question of 
working out the terms of the marriage contract. The negotiations with 
American Hide and Leather went on for about six months. 

"Rowland wanted to make a deal, but he didn't know how to go 
about doing it," Luther Henderson recounted. "Charles knew what he 
wanted, but he also was very cognizant of the fact that American Hide 
had no cash and no credit. So he had to work something out that would 
overcome that obstacle. We finally came up with the deal we wanted 
and they agreed to do it. The tax laws were different then from what 
they are now, and we were able to structure a magnificent deal in which 
nobody could lose." 

Before the deal could be consummated, however, the consent of all of 
the Tandy Leather Company shareholders had to be secured. This was 
no simple task. 

"From 1950 to 1955, one of Charles Tandy's jobs had been to allo- 
cate shares in the new stores," Henderson explained. "His usual prac- 
tice had been to take 50 percent for himself and Dave Tandy, give 25 
percent to the store manager, and distribute rights to the remaining 25 
percent among other members of the organization. Charles decided how 
much of each deal he was going to let various people have. For exam- 
ple, Charlotte was considered a very good store and Charles allowed 
me to have 15 percent of it, which was out of the kindness of his heart, 
probably because I was a newcomer to the organization. 

"By the time of our deal with American Hide and Leather, we had 
about 110 shareholders with varying interests in corporations all over 
the country. In addition, we had brought in Bill Tandy's 12 stores in an- 
ticipation of the merger. Now we had to get every one of the stockhold- 
er, tn roriRpTit to the American Hide and Leather Heal. It was a very 
dilricuit jod. its very hard 10 get any gioup ui 110 people lo agree en 
anything unanimously. 

"Charles and Jim West and I divided up the country into three parts 
and each of us took a third and went out and visited with each individu- 



HIGH HOPES TURN TO FRUSTRATION 61 



„, „♦ ~ n „ nnar * n ^t him to sign uo. We didn't dare assemble them. 

all in one place and try to sell them all at one time. So we decided to 
j:..;j„ „-^ ft n«n,ior w*> pvpntnallv sot everybody. But, for a while,, 
there were two or three who held out. The lawyers we were dealing 
with in New York didn't think we could swing it, but we told them 
we'd deliver and we did." 

Under the terms of the agreement which Charles Tandy hammered 
out with Stanley Rowland, Tandy Leather Company was acquired by 
American Hide and Leather Company for nothing down and $2.3 mil- 
lion in noninterest-bearing notes. American Hide and Leather also obli- 
gated itself to make contingent payments to the Tandy group based on 
Tandy Leather's own earnings for a 10-year period. The key part of the 
agreement, however, was the granting of options by American Hide and 
Leather Company to Tandy Leather Company shareholders to buy 
500,000 shares of American Hide and Leather stock over a 4-year peri- 
od at a price of $4 per share. 

The $2 3 million in notes was to be repaid in fixed quarterly pay- 
ments equal to 40 percent of Tandy Leather's consolidated net earnings 
before federal income taxes. American Hide and Leather also was re- 
quired to make further payments on the notes equal to all amounts it re- 
ceived from the sale of shares of its common stock upon exercise ot the 
options by Tandy shareholders. The agreement stipulated that a portion 
of the options would come due quarterly, and that any options not exer- 
cised would be forfeited. The option price of $4 per share was the esti- 
mated fair market value of American Hide and Leather stock as of 

September 30, 1955. 

The contingent payments were based on a percentage of Tandy 
Leather's consolidated net earnings before federal income taxes over a 
10-year period. The payments would amount to 50 percent of Tandy 
Leather's net earnings for the 4-year and 9-month period ending June 
in 10*0. n ««*•«* for the fiscal vear ending June 30, 1961; 25 per- 
cent for the 4-year period ending June j0, b^, a«" o,,p~~ei~ ™r 
the year ending June 30, 1966. 

"American Hide and Leather Company acquired Tandy Leather 
Company on a payout basis," Luther Henderson elaborated. "We got a 
fixed payment of $2.3 million for our tangible assets at book value, 
plus a contingent payment based on the Tandy Leather earnings after 



6* ■■■- HIGH HOPES TURN TO FRUSTRATION 

the acquisition was completed. It was a 10-year deal under whkjj we 
basically would get half of the profits we generated for the f5 rst f lve 
years and one-fourth of our profits for the next four years." 

Bill Michero added, "We literally sold the company for cash that the 
buyers didn't have. They bought us with our own earnings that we 
shipped up to Boston and they then sent back to us." 

The options to purchase 500,000 shares of American Hide and Leath- 
er stock, however, provided Charles Tandy with the stock exchange 
listing he was seeking. 

"The phrase used on Wall Street was a 'back door' listing," Iy[i c hero 
noted. "They were a shell of a company that had little or no operations 
and we exchanged stock with them. Suddenly, we were a publiciy,.^^ 
enterprise with a ready market for our stock at a price that was quoted 
in the newspapers every day. It was a stock swap. We swapp ec j our 
closely-held stock for the stock of a company with a listing on the New 
York Stock Exchange. The nature of the exchange was through the op- 
tion to buy the 500,000 shares of American Hide and Leather stock at 
$4 a share." 

Alexander Hamilton, a partner in the New York City law fi^ f 
Burke & Burke, which represented American Hide and Leather Com- 
pany, has remained convinced that Charles Tandy hoped to gain control 
of American Hide and Leather through the exercise of the options. 

"He was a brash young Texan, very ambitious, very sure of himself 
very bright, with a mind like a computer," Hamilton said while being 
interviewed in his office overlooking Park Avenue. "I remember being 
amazed at his ability to toss out numbers and figure out ratios in his 
head in jig time." 

Tandy's game plan, according to Hamilton, was for American Hide 
and Leather to liquidate its tanneries and use the money to pay down its 
obligations. "Then, hopefully, with Tandy Leather Company making 
money, that would provide a new direction in manufacturing rather than 
tanning for the parent company." 

Jesse Upchurch, who married Gwen Tandy's daughter, Connie and 
later became a Tandy director and a major stockholder, recalled that he 
had "serious reservations" about the method Tandy chose to get a New 
York Stock Exchange listing. Upchurch was especially concerned that 
American Hide & Leather was generating losses greater than the profits 



HIGH HOPES TURN TO FRUSTRATION 63 

of the Tandy Leather Company. "However," Upchurch added, "Charles 
was convinced he could stop the American Hide and Leather losses and 
generate a strong cash flow for aggressive expansion of the very profit- 
able Tandy group." 

Bill Michero didn't believe it was initially Tandy's intent to acquire 
control of American Hide and Leather. "If the Rowland management 
had done some successful investing and some successful enterprising, 
very likely Charles would have been content to let that management re- 
main in control," Michero opined. "But early on it was obvious that the 
management was not doing things right." Stanley Rowland had de- 
scribed American Hide and Leather's rationale for making the deal in a 
letter to company employees, dated October 18, 1955. 

"As you know, American Hide and Leather Company has lost money 
for several years," Rowland wrote. "Under our present tax laws, such 
losses can be used to offset earnings at any time during the five years 
following the year in which the loss occurred. The effect of this proce- 
dure is to eliminate federal taxes on future earnings as long as the total 
amount of the earnings during the five-year period does not exceed the 
amount of the accumulated loss. 

"By purchasing the Tandy Leather Company, their earnings become a 
part of the earnings of American Hide and Leather Company and thus 
will not be taxed. If the Tandy Company continued to operate as a sep- 
arate company, a large part of their earnings would be paid out in taxes. 
Since it is advantageous for the Tandy Company to become a part of a 
company with a stock listed on the Stock Exchange, we were able to ar- 
range with them to pay for their company on an installment basis out of 
their own earnings — utilizing that part of their earnings which would 
otherwise have been paid out as taxes. The American Hide and Leather 
Company has not used any of its own capital to complete this transac- 
tion. It is an unusual transaction, but one that is advantageous to both 
companies," the letter concluded. 

Rowland later described the deal this way: "We bought this cow with 
its own milk." 

With the signing of the agreement, effective October 1, 1955, Tandy 
Leather Company became Tandy Industries, Inc., a wholly-owned sub- 
sidiary of American Hide and Leather Company. Charles Tandy re- 
tained the title of president of Tandy Industries, Inc., and he, Jim West, 



64 HIGH HOPES TURN TO FRUSTRATION 

and Luther Henderson became members of the American Hide and 
Leather board of directors. 

The term leveraged buyout was never mentioned in connection with 
the deal, but the fact was that Charles Tandy had engineered a classic 
LBO years before it became a Wall Street staple. 

The marriage of convenience began to flounder even before the hon- 
eymoon was over. 

The three Texans, who represented a minority on the 7-member 
board, immediately began pushing for the divestiture of the two mon- 
ey-losing tanneries. 

"We used all our influence to convince them that the tanning business 
didn't have much of a future, and we finally succeeded," Henderson 
said. "But it took some time." It also resulted in some strained feelings 
among the old line board members who resented the Texans' blunt ap- 
proach in telling them how to run the business. 

But the main cause of friction on the board occurred as a result of the 
Tandy group's negative reaction to the aggressive acquisition program 
on which the American Hide and Leather Company management now 
embarked. 

"They began looking for other businesses to buy," Henderson related. 
"They found these sorry businesses to buy, and Charles, Jim and I 
couldn't stop them." 

Three companies were snapped up in a three-month period between 
July 1 and October 1, 1956. The first acquisition was Musgrove Petro- 
leum Corporation, Inc., of Wichita, Kansas, an oil and gas drilling and 
producing firm with operations in Kansas and Oklahoma. Next came 
Shain & Company, Inc., of Boston, a converter and distribixtor of fab- 
rics and meshes to the shoe industry. The third company to join the fold 
was Dunbar Kapple Inc. of Geneva, Illinois. Dunbar Kapple had been 
organized in 1942 to produce military aircraft components. After the 
war, it began making auto trailers and farm trailers under contract with 
Sears Roebuck. With the advent of the Korean War, it had returned to 
™n^-,fnr*t<'*r*ri<y nirrrnf^ fornnors^ntR "nrimsrilv flexible stainless st^^l 
hose and ducting Tor jet engines. 

The American Hide and Leather name was no longer considered re- 
flective of the enterprise, and on December 1, 1956, the name was 
changed to General American Industries, Inc. James H. Dunbar, Jr., 



HIGH HOPES TURN TO FRUSTRATION 65 

President of Dunbar Kapple, and Pierce C. Musgrove, President of 
Musgrove Petroleum, were elected to the board of directors, replacing 
Jim West and Luther Henderson. 

"We weren't enthusiastic about it," Henderson said. "But Charles ac- 
cepted it." 

It was Jesse Upchurch's contention, however, that Rowland and Dun- 
bar induced Tandy to agree to West and Henderson leaving the board in 
exchange for his being named board chairman of General American In- 
dustries. "But they never had any intention of permitting him to run the 
company," Upchurch added. Tandy, indeed, was later elected board 
chairman, but his tenure of office was short-lived. 

With the departure of Henderson and West from the board, Tandy's 
voice was the only one left to question company policies that were be- 
ing routinely rubber-stamped by the other directors. Tandy was con- 
cerned, not only about the dubious quality of the companies that had 
been acquired, but by the fact that the Musgrove and Dunbar Kapple 
acquisitions had been made through an exchange of stock. A total of 
196,820 shares was issued in the Musgrove purchase and 294,342 
shares in the Dunbar Kapple deal. Tandy viewed this as a serious dilu- 
tion of his group's equity in the corporation. 

"Charles felt that they were giving away too much stock to make 
these deals, and that the companies they were buying were simply not 
contributing to the total picture," Henderson said. "The Musgrove Oil 
acquisition was the biggest mistake. If Stanley Rowland and his people 
had known more about the oil business, they'd never had made the 
deal. Dunbar Kapple got so many shares that Charles saw Jim Dunbar 
as a potential rival for running the company. As far as he was con- 
cerned, the Dunbar Kapple acquisition was what sunk the ship." 

One acquisition that did carry Charles Tandy's imprimatur was the 
purchase by General American Industries, on December 31, 1956, of 
Tex Tan of Yoakum for cash and notes amounting to approximately $1 
million. Tex Tan, based in Yoakum in south Texas, manufactured and 
sold a complete line of Western leather goods such as saddles, riding 
equipment, gun cases, wallets, boots, moccasins, and hundreds of other 
items to retail outlets across the country. It was a good complement to 
the Tandy Industries operations, Charles believed. Begun in 1919 as a 
small tannery, the company had moved into the production of leather 



66 HIGH HOPES TURN TO FRUSTRATION 

consumer goods in 1929 after Carl C. Welhausen became Tex Tan's 
general manager. 

Relations between the Tandy group and the General American man- 
agement in Boston continued to deteriorate. The frustration and anger 
in Fort Worth mounted as it became all too apparent that of the five di- 
visions that made up the parent company, only Tex Tan and Tandy In- 
dustries were profitable. 

Charles Tandy's fury boiled over as he saw the hard-earned Tandy 
and Tex Tan profits being used to plug the losses of the other divisions 
rather than being utilized to expand the profitable Texas-based opera- 
tions. It was maddening to see profits generated in Fort Worth and Yoa- 
kum being dissipated on drilling dry holes in Kansas and Oklahoma. 

"Most of us were exercising our options on General American stock, 
as they fell due, and we had built up a pretty sizable position in it," Bill 
Michero noted. "So we weren't happy over the way things were going." 
General American stock was selling at around $3 to $3.50 during this 
period, which meant the Tandy group was exercising its options at a 
price above market value. It took about two years for the situation to 
become really unbearable. We faced the problem, of what we could do 
about it? And it all boiled down to a simple question. Who was going 
to run the company?" 

Tandy Industries sales and earnings were continuing to grow, with 
net income before taxes exceeding the $1 million mark for the first time 
in the fiscal year ended June 30, 1957. As the earnings poured in, they 
were utilized to amortize the $2.3 million in fixed payment notes held 
by the Tandy group and to finance the exercise of the stock options as 
they fell due each quarter. 

At the General American Industries annual meeting held in Fleming- 
ton, New Jersey, on November 13, 1957, Charles Tandy was elected 
chairman of the board, succeeding Claude Douthit, Sr., who had died 
earlier that year after having served as board chairman for nearly three 
decades. This was essentially an honorary title. Stanley Rowland, who 
was re-elected president and treasurer continued as chief executive of- 

cr TT jA. _ HP J„_ - -,-X^J 4-1 1 n ~A «, rt *.«U^- 

Il^Ul. XJLWVVV^Wl, L11W X CUJAAJ £,1V/C*jp VV UO glUlilVU UUV7U1V1 ^^wiva iiiv«iwvi. 

with the election of John B. Collier, Jr., president of the Fort Worth 
Poultry and Egg Company, as a director. 

The bickering at board meetings between Tandy and the other direc- 
tors now began to get highly emotional. Alex Hamilton recalled the 
tension and controversy as the in-fighting became increasingly volatile. 



HIGH HOPES TURN TO FRUSTRATION 67 

"It became clear that Jim Dunbar of Dunbar Kapple wanted to be the 
big cheese and that Pierce Musgrove of Musgrove Petroleum did, too. 
And so did Charles Tandy. Each one of the three thought that the other 
two should go and that he should be the boss. They were really bad- 
mouthing each other at board meetings." 

Stanley Rowland, seeing his power base eroding, had made the deci- 
sion to ally himself with Dunbar in order to keep his job as president, 
apparently convinced that Dunbar would emerge on top in the internal 
power struggle. During this period, Charles Tandy had made it a point 
to keep up his contacts at the First National Bank of Boston, which was 
still a major General American Industries creditor. Now, totally frustrat- 
ed, Tandy asked Luther Henderson to prepare a report for submission 
to the bank that summed up the situation from the Tandy group's point 
of view. 

Henderson's report stated unequivocably that there was no way for 
General American to be profitable under its current mode of operation. 
In summary, the report stated, the more business the company did, the 
more money it would lose. 

"The report was written," Henderson said, "both for own internal pur- 
poses and to present an orderly review of the situation to the proper 
people at the bank. Charles didn't send a copy to Stanley Rowland be- 
cause the report did not contain anything that Rowland had not heard 
from him before." 

The report, which was handed to Mort Jennings, the loan officer han- 
dling the General American account at the First National Bank of Bos- 
ton, eventually found its way into the hands of Stanley Rowland and 
Jim Dunbar. To them, Tandy's going to the bank behind their backs 
was an act of treason. They viewed the move as a declaration of war 
and they decided they would fire the first shot. They held their fire until 
the board of directors meeting that followed the General American In- 
dustries annual meeting in Flemington, New Jersey, on November 12, 
1958. The General American annual meetings were traditionally held in 
Flemington, a sleepy town that had achieved worldwide renown as the 
site of the trial of Bruno Richard Hauptmann for the kidnapping of 
Charles Augustus Lindbergh, Jr., in 1932. One of the principals in that 
trial was Norman Schwarzkopf, the head of the New Jersey State Po- 
lice, whose son, General H. Norman Schwarzkopf, would one day be- 
come a national hero as the commander of the United States armed 
forces in the Desert Shield and Desert Storm operations in the Persian 



68 HIGH HOPES TURN TO FRUSTRATION 

Gulf. Flemington, located in an isolated section of rural New Jersey, 
was favored by the General American management as the site of the 
annual meeting because it was difficult to get to, and that meant fewer 
irate shareholders with which to contend. 

The meeting of the General American board took place in New York 
City on the morning of November 13, 1958, and was highlighted by the 
election of Jim Dunbar as chairman of the board succeeding Charles 
Tandy, who was elected president. Immediately after the meeting ad- 
journed, Dunbar confronted Tandy and notified him that he was being 
terminated as president of the corporation and would be replaced by 
Stanley Rowland. 

"Your ploy with the bank backfired," Dunbar told Tandy. 

Dunbar, however, was reluctant to go the final step of firing Tandy 
from his position as president of Tandy Industries, General American 
Industries' most profitable subsidiary. 

"Go back to Texas and keep on running the leather business," Dunbar 
directed Tandy. 

It was the lowest moment of Charles Tandy's life. 

As he later told Boston banker William L. Brown, "I thought I'd lost 
the family jewels." 

Charles and Gwen visited Bill Collins and his wife in San Miguel, 
Mexico, shortly after Charles' ouster as board chairman. "He was really 
sweating out what was happening. He was very close to losing control 
of Tandy Leather Company and he was very worried, very concerned," 
Collins said. 

He was also ready to go to war. 

"It was now obvious," Jesse Upchurch related, "what had to be done 
to regain control of the Tandy Leather group's assets." 

Charles Tandy returned to Fort Worth with fire in his eyes. He had 
left Boston without voicing any threats to the General American man- 
agement because he figured there was nothing to be gained from alert- 

mg mCm auOui WUai nC piamieu tu uu. 1 s w vv nv ^a,xt^\x x±i& j^c^pxc; 

together and told them to set readv for the battle of their lives. 

As he talked of the plOAy ilgllt ilC picUIUCU tu natulan, mo aiiiiiiatiGju 

grew. Smoke seemed to be coming out of his ears, as well as from the 
cigar on which he was furiously puffing. He pounded a hamlike fist on 
his desk. 



HIGH HOPES TURN TO FRUSTRATION 69 

"I'm gonna beat those bastards," he proclaimed, "if it's the last thing 
I do." 

The contest would mean that every member of the Tandy group 
would be asked to lay everything he or she owned or could borrow on 
the line in one giant crapshoot. 

"But I promise you this," Tandy trumpeted, clenched fist upraised 
and hammering the air, "when we win, and win is what we're gonna do, 
you won't be sorry. We're gonna take back this company and I'm gon- 
na make you all rich." 



Chapter 5 
Saving the Family Jewels 



It was now Charles Tandy's hand to play, and as he looked over the 
cards he was holding, he found an ace in the hole — the nearly 250,000 
shares of General American Industries stock on which the Tandy group 
still held options at $4 per share. 

As of June 30, 1958, the end of the fiscal year, the Tandy group 
had exercised options on 256,260 shares, approximately half of the 
500,000-share option it had received as part of the merger agreement 
with American Hide & Leather Company in October 1955. The fixed 
payment notes totaling $2.3 million held by the Tandy group had been 
fully retired, and contingent payments of $1,440,886 had been paid to 
the former Tandy stockholders, all out of Tandy Industries' earnings. 

Now, in the waning days of 1958, as Charles huddled with Luther 
Henderson, Jim West, and Jesse Upchurch to plot the strategy for gain- 
ing control of the company, it was readily apparent that the first priority 
was to exercise the options on the remaining 243,740 shares. This 
would give the Tandy group approximately one-third of the General 
American outstanding stock, a sizable position of strength from which 
to deal. It was Tandy's hope that he could avoid an expensive proxy 
battle by convincing Stanley Rowland and Jim Dunbar that he held the 
winning hand. 

"When we decided to fight them, we knew we had to be able to win 
an election to control the board," Luther Henderson revealed. "With our 
options, we had about 30 percent of the stock in our group. So we 
didn't have to acquire too much additional stock to be dangerous." 

One of the Tandy group's major assets was Jesse Upchurch, who had 
married Gwen Tandy's daughter, Connie, in 1951. Upchurch had begun 
accumulating American Hide and Leather preferred stock immediately 
after its merger with Tandy Leather Company. 

71 



72 SAVING THE FAMILY JEWELS 

"I bought a tremendous amount of American Hide 6% cumulative 
preferred stock which nobody else seemed to be interested in," Up- 
church reported. "Since the company had ceased paying dividends, no- 
body thought the preferred stock would ever be worth anything. I was 
buying the staff for 50 cents on the dollar. Later, I traded it all in for 5% 
income debentures, plus warrants to buy Tandy stock at $7 a share for 
five years and at $9 a share for two additional years. Those warrants 
turned out to be very valuable. But you could have picked them up at 
one time for as low as 75 cents." 

Upchurch eventually would become Tandy Corporation's largest in- 
dividual shareholder, owning more than 2 million shares. By the time 
he exercised his warrants to buy Tandy stock at $9, the stock was sell- 
ing at more than $100 per share. When it appeared in early 1959 that a 
proxy fight was inevitable, Connie and Jesse Upchurch promised Tandy 
that he could count on their financial support in acquiring any major 
blocks of stock that might become available. In addition, Gwen Tandy 
told Charles that her checkbook was open to him when and if he need- 
ed it, 

in the spring of 1959, Tandy engaged the services of George Bemas, 
a New York attorney, to advise him on proxy fighting strategy. One of 
Bemas' recommendations was that Tandy retain Georgeson and Com- 
pany, a leading Wall Street proxy solicitation firm. Tandy flew to New 
York for a meeting with the Georgeson principals who informed 
him they would require a retainer fee of $375,000 to take on the 
project. 

"There was no way Charles could raise that kind of immediate cash," 
Upchurch reported. "So Gwen Tandy wrote a check for $375,000 from 
her personal funds and handed it to Charles." 

Buoyed by this backing, Tandy now threw himself into the effort to 
wring every last ounce of financial support from his coterie of former 
Tandy Leather Company stockholders. Resorting to the same tactics 
that had worked so effectively in 1955 to gain their approval of the sale 

vided the country up into three segments and once again hit the road 
with Luther Henderson and Jim West. 

"They formed a team," John Wilson recalled. "Charles went in one 
direction, Luther Henderson went in another direction, and Jim West in 
still another." 



SAVING THE FAMILY JEWELS 73 

Wilson, who was managing a Tandy Leather store in Denver, was in 
the store early one morning when the phone rang. Luther Henderson 
was on the line. 

"I need to talk with you privately," he told Wilson. 

"Where are you?" 

"I'm in the hotel right behind the store. Why don't you come over 
and have a cup of coffee with me?" 

A few minutes later, Wilson was seated across from Henderson in a 
booth in the hotel coffee shop. "What we'd like you to do," Henderson 
said, "is go over to your bank and borrow all the money you can." 

In recalling the incident, Wilson declared, "Now remember, this was 
Luther Henderson talking, not Charles. I would have preferred that it 
was Charles, but I knew that Luther was his agent. So I said, 'Okay, I'll 
do it.'" 

Later that morning, Wilson went to see his banker to find out how 
much he could borrow, and was shocked when the bank agreed to lend 
him $11,000. 

"They loaned it to me on the spot, on my signature. Of course, the 
fact that we were doing business with the bank helped. With the money, 
I bought General American stock, so that Charles would have the paper 
when it came down to a vote," Wilson said. "That's exactly what every 
other store manager did." 

Lloyd Redd, then the manager of a Tandy Leather store in Omaha, 
was standing at the cash register, having just completed a sale, when 
Charles Tandy walked in, cigar in hand, a big grin on his face. 

"If you're wondering what I'm doing in Omaha," Tandy declared, 
"I'm here to do you a favor. I'm gonna make you rich." He then steered 
Redd to the back of store where his small office was located. 

"Charles then made his pitch about how each of us had to go into 
hock to buy up all the General American stock we could lay our hands 
on," Redd recounted. "He showed me his own financial statement that 
revealed his entire net worth was tied up in General American stock, 
making the point that he was putting everything he had into buying 
stock because he had total faith in what he was doing." 

"What I want you to do is go to your bank and borrow $18,000," 
Tandy told Redd. 

"That was a large sum to me," Redd acknowledged. "I didn't figure I 
could borrow that much money. But the thought went through my 



74 SAVING THE FAMILY JEWELS 

mind, "I'll go to the bank and ask for the loan, and after they've turned 
me down, at least 1 can tell Charles that I tried/' 5 

Redd went to the Omaha National Bank, where he was informed he 
could borrow $4,000 on his assets. 

"What about the other $14,000?" he asked. The banker told him that 
the bank would lend him that sum on his signature. 

"So I had an $18,000 loan," Redd said. "Charles didn't have to co- 
sign the note. I did it on my own, but I did it because Charles was say- 
ing, 'Do it.' I took that $18,000 and bought General American stock at 
$4 a share." 

Bill Vance was enrolled in a nine-month middle management pro- 
gram at the Harvard Business School when the battle for control of 
General American Industries erupted. 

"Charles had sent me up to Harvard to take the course and then come 
back and help him decide whether or not to send other of our young 
men up there," Vance reported. "While I was at Cambridge, I had got- 
ten to know Stanley Rowland. He'd invited me to come by and visit 
him in his office so he could show me the company operation and we'd 
had lunch and dinner a few times. Then, one day, Stanley asked me to 
come out to his office. We talked about what I might do in the com- 
pany, what my future might be, and I sensed that something was wrong. 
I didn't know about the proxy fight that was coming up, but I got the 
distinct impression that Stanley Rowland wanted to get rid of Charles. 
Charles was aggressive. He wanted to go one way and Stanley wanted 
to go another. It was like two bulls meeting head on." 

Rowland now asked Vance, "Could you go the full course that I've 
laid out?" 

Vance replied, "I don't know, Stanley. I'm not sure I understand the 
foil implications. But I can tell you this. If it's what I suspect, that I'd 
have to turn my back on Charles Tandy, I'd rather leave the company 
first. Tandy Industries has become my home, the Tandy people have 
oecome my iamny. men vancc auucu, x vc u^u u/nig tu tmi±±v ^i 
nriv n f fV*^ firim-noi Tsndv neor?1e who'd turn their backs on Charles, 
ana l can t tnmk of a single one. Ii"u be like turning yuui um,k un a 
brother." That was the last time Bill Vance saw Stanley Rowland. 

Vance recalled what now ensued. 

"Not only did Charles and Jim West, and Luther Henderson spend a 
lot of time on the road, they also spent a lot of time on the telephone. 



SAVING THE FAMILY JEWELS 75 

They had private and small-group meetings with store managers. It was 
just before I left Harvard and came back to Fort Worth that all this trav- 
eling took place. We all realized there was a real danger of losing the 
company." 

To Vance's knowledge, not a single store manager failed to go along 
with what Tandy, Henderson, and West asked them to do. "Every one 
of us agreed to hock himself to the neck," he declared. 

Vance told of going to the Fort Worth National Bank with another 
Tandy Industries employee. "You weren't supposed to borrow money 
to buy stock," he noted. "That's illegal. The loan officer knew what we 
were there for. He told us, Tf you're here to borrow money to buy 
stock, I can't lend it to you.' We told him we had some other things in 
mind that we needed the money for. When he asked us what we had to 
put up for collateral, we told him we had some stock we could put up. 
He asked us, 'When can you let me have the stock?' We told him, 'In a 
few days.' And he said, 'Okay.'" 

The Tandy group now received a major boost that couldn't have 
come at a more fortuitous time. Pierce Musgrove, who had become dis- 
enchanted with the internal strife, offered his shares in General Ameri- 
can Industries for sale so that he could buy back his oil company with 
the proceeds. Musgrove and his associates had received nearly 200,000 
shares of stock when Musgrove Petroleum Corporation had been ac- 
quired in July 1956. 

"When Charles talked to Musgrove about siding with us in the proxy 
fight," Jesse Upchurch related, "Musgrove responded, 'Jesus, Charles, I 
didn't come into this to get into this kind of fight. I just want to get out 
and get back into the oil business again on my own.'" 

The Tandy group now faced the problem of coming up with more 
than $1 million, to buy the critically-needed Musgrove shares. Connie 
and Jesse Upchurch again rode to the rescue. 

"By now," Upchurch reported, "Charles had just about run out of 
cash and had used up all of his credit at the banks. So my wife and I ad- 
vised him that we would personally take the entire block of Mr. Mus- 
grove's shares." 

This satisfied Musgrove, who agreed to vote his shares with the 
Tandy group upon the assurance that he would be able to reacquire 
ownership of Musgrove Petroleum as soon as the new management as- 
sumed control. 



76 SAVING THE FAMILY JEWELS 

There was still one major hurdle to clear — a significant block of 
stock, close to 300,000 shares, held in The Netherlands by foreign in- 
vestors and controlled in Amsterdam by Baron Cornelis Johannes 
Schimmelpenninck van der Oije. Baron Schimmelpenninck had ac- 
quired the stock over a period of several years, acting as a broker for a 
group of investors. With a nip-and-tuck election looming, the foreign- 
owned shares represented the balance of power. 

In the late summer of 1959, with the November annual meeting 
drawing closer, Charles Tandy learned to his dismay that Baron Schim- 
melpenninck was leaning toward voting his shares with management. A 
distraught Tandy immediately hopped a plane to New York for a con- 
ference with Coleman Burke, a prominent Wall Street lawyer and a 
partner in Burke & Burke, legal counsel to General American Indus- 
tries, Inc. Burke was a former director of General American Industries, 
and he and Tandy had become good friends while serving together on 
the General American board. Burke had become impressed with 
Tandy's business acumen and the strong earnings performance of 
Tandy Industries. He had sided with Tandy on a number of occasions at 
board meetings. He had privately told Tandy that he believed a change 
in management would be beneficial to the future of the company. He 
now gave Tandy a sympathetic ear as they met in his office. 

"Rowland thinks he has the baron's vote sewed up," Tandy told 
Burke. "I know the baron thinks a lot of you and has followed your ad- 
vice before. Would you go to Amsterdam and talk to him? If you can't 
get him to vote with us, at least try to get him to remain neutral. If he 
remains neutral, we can't lose." 

Burke, who remained a close friend and advisor to Charles Tandy 
over the years, flew to Amsterdam several days later and outlined the 
situation to Baron Schimmelpenninck. Before returning to New York, 
he extracted a pledge from the baron that he would remain neutral in 
the dispute. 

Jesse Upchurch recalled a visit he and Charles Tandy had with Baron 

k>CIiiIIilAACipCliiiIIlUiv oCVwjlcU y 'Cilia iUlwi. 

"It was in 1963 or '64," Upchurch said. "We'd been skiing in Swit- 
zerland, Charles and Gwen and Connie and I, and we went to Amster- 
dam to meet the baron who was then the head of the Amsterdam Stock 
Exchange and also the European Exchange Association. We talked 
about the proxy fight and the baron told us he looked at his records and 



SAVING THE FAMILY JEWELS 77 

said to himself, 'Wait a minute. All the rest of the General American 
companies are losing money. Only the Tandy group is making money.' 
So he threw his blessing to the Tandy group by remaining neutral." 

The baron remained a Tandy shareholder until his death in 1982. The 
Tandy shares he controlled continue to be managed by his investment 
firm in Amsterdam. 

With the large block of foreign shares neutralized, the Tandy group 
now had a lock on the ultimate outcome, holding a clear majority of the 
shares that would be voted. 

"Management never did read the signals right," Luther Henderson 
observed. "By the time Stanley Rowland finally got the message, it was 
too late. But he wouldn't capitulate and it turned into a real head- 
butting situation." 

Neither side, however, had actually engaged in the formal solicitation 
of proxies, although the Tandy forces had filed all of the necessary pa- 
pers with the Securities and Exchange Commission and had completed 
all of the other needed arrangements. But after the baron's decision 
to remain neutral, the necessity for a proxy fight was precluded. 

As the drama reached its climax, one bit of Tandy histrionics re- 
mained to be staged. 

On a brisk mid-September afternoon, a car pulled up in front of an 
old, red brick, malodorous building in Lowell, Massachusetts, that once 
had been the home of an American Hide and Leather Company tannery. 
A tall, husky man in a rumpled suit alighted and strode purposefully 
through the entrance, flicking the ashes from the cigar he clutched in 
his right hand. He entered a large room that had been converted into an 
office area and swaggered up to the receptionist seated behind a desk. 

"I'm Charles Tandy from Fort Worth, Texas," he drawled. "I'm here 
to see Stanley Rowland." 

Rowland had only recently begun officing in the old tannery, al- 
though the company's executive offices were still officially located at 
17 East Street in downtown Boston. 

"I'll let Mr. Rowland know you're here," the receptionist told Tandy. 

"That won't be necessary," Tandy said. "I'll tell him myself." 

He swung past the receptionist's desk toward a nearby office and 
strode in. 

Rowland couldn't have been any more shocked had he looked up and 
seen Paul Revere standing there, lantern in hand. 



78 SAVING THE FAMILY JEWELS 

For a moment, there was dead silence as the two antagonists stared at 
each other. 

Tandy's voice then broke the silence. 

"Stand up." 

Automatically, Rowland responded to the order. He stood up. 

Tandy now insouciantly sauntered around the desk behind which 
Rowland stood and sat down in Rowland's chair. 

"This is my chair now," Tandy said, savoring each word. "I'm in and 
you're out. I've got the tickets." 

As he described the scene, from an account related to him by Charles 
Tandy, Bill Brown, the Boston banker, chuckled and added, "That was 
Charlie Tandy. He was the most fascinating guy I ever met. There'll 
never be another like him." 

Several days later, Coleman Burke sat down with Stanley Rowland 
and Jim Dunbar in Boston to inform them officially that the game was 
over. Charles Tandy held the winning hand. 

"You guys are going to get licked," Burke said, mincing no words, 
"and you'd be much better off to make peace with Mr. Tandy." 

The peace treaty that was negotiated included giving the Tandy group 
five seats on the 9-member board and electing Charles Tandy board 
chairman and chief executive officer. It also authorized a cash payment 
of $1,000,000 in full settlement of the contingent payments due the 
Tandy group through July 30, 1966. As of June 30, 1959, contingent 
payments totaling $2,108,481 had already been paid out of Tandy In- 
dustries' earnings. 

The five Tandy representatives who were subsequently elected to the 
board at the annual meeting were John B. Collier, Jr., president of Fort 
Worth Poultry & Egg Company; Luther A. Henderson, Charles D. 
Tandy, Carl C. Welhausen and James L. West. The other four directors 
named were James H. Dunbar, Jr., Alfred H. Hauser, vice president of 
the Chemical Bank New York Trust Company; Joseph S. Nye, a part- 

.*. ^« "NT* *£& £V "VkJ^i-i-fyX^ryrxA ATp" - ^/ "V/-\**V ^""S-H/ o-n -t-nw^ofrvior-i'f prlvi cr*r"\/ "Firm 

lid ill iNye oc vv iuttntau, InLvv ivna v-^i-/j <**i uivvaunvm avxViS\jx y miii, 

and Stanley M. Rowland Charles Tandy was the lamest individual 

SIUCKIIUIUCI Oil U1C UUcllU Willi 11W,^^V7 audita. 

The annual meeting, which was held on Thursday afternoon, Novem- 
ber 12, 1959, in Flemington, New Jersey, was called to order by James 
H. Dunbar, Jr., chairman of the board, promptly at 2 P.M. Alex Hamil- 
ton served as the secretary of the meeting. Inspectors of election were 
Edwin K. Large, Sr., and Edwin K. Large, Jr. 



SAVING THE FAMILY JEWELS 79 

The inspectors of election reported that the holders of 10,898 shares 
of six percent cumulative preferred stock were present or represented at 
the meeting out of 14,509 shares issued and outstanding and that 
1,371,143 shares of common stock were present or represented out of a 
total of 1,667,705 shares. Alex Hamilton now rose to place into nomi- 
nation the candidates for election to the board of directors. 

Charles Tandy, seated in a front row seat in the small meeting room 
which was actually a part of the law offices of Edwin K. Large, Jr., lis- 
tened expectantly as Judge Large announced the results of the vote. It 
was a moment he would forever savor. 

"Mr. Chairman," Judge Large intoned, "each nominee for director has 
received a total of 1,382,041 votes, represented by 10,898 shares of pre- 
ferred stock and 1,371,143 shares of common stock." 

"I declare the nominees duly elected," Dunbar declared. 

After a brief flirtation with disaster, the family business was back in 
Charles Tandy's hands. 

The takeover of General American Industries by the Tandy forces 
had actually begun a month earlier, when Charles dispatched Bill 
Michero and Billy R. Roland, to Boston. Roland, who had joined the 
Tandy Leather Company in June 1954 after earning a degree in ac- 
counting from Texas Christian University, had started out as $300-a™ 
month accounting supervisor reporting to Luther Henderson. By 
October 1959, when he was ordered to Boston, he had moved up to the 
number two slot in the accounting department behind Henderson. 

He and Michero set up camp in the General American Industries' of- 
fices across from the South Street Station in a warehouse district in 
downtown Boston. "The revolution was over," Michero said, "and Bill 
and I went up there to take charge of the corporate office, Bill as the 
accounting brains and I as everything else." 

They found a husband~and-wife team in the office, Alice and 
Lawrence Carboney. Carboney held the title of assistant secretary and 
assistant treasurer and handled all of the bookkeeping and treasury 
functions, while his wife was in charge of stockholder relations. 

"Stanley Rowland still held the title of president, but he was on the 
way out," Roland said. "That's why Charles sent Bill and me up there. 
We learned the operations as quickly as possible and Bill took over 
some of Alice's functions, the stockholder relations bit and all that, and 
I took over all the accounting that Larry Carboney was doing for all the 
various companies. He had consolidated all of the accounting for the 



80 SAVING THE FAMILY JEWELS 

various subsidiary companies, so I had to brush up on my consolida- 
tions of accounting. I'd been doing it for some time in Fort Worth, but 
nothing on as large a scale as they were doing in Boston. Dunbar Kap- 
pie was losing a lot of money, and Jim Dunbar was still chairman of the 
board of the corporation. But I knew that he was on his way out, too." 

The first item on Charles Tandy's agenda after he assumed control 
was to move the General American headquarters to Fort Worth. But 
when he told Coleman Burke and several New York stockbrokers of his 
plans, they cautioned him to hold his horses, at least for a while. 

"The financial people that Charles talked to told him that if he moved 

the rnmnanv immediately from Boston to Fort Worth, General Ameri- 

_„ k — j ^ 

can would become the laughingstock of Wall Street," Jesse Upchurch 
recalled. 

To assuage the fears of his financial advisors, Tandy made an interim 
move in December 1959, transferring the General American headquar- 
ters to New York City at 357 Park Avenue, across from the Commo- 
dore Hotel and adjacent to Grand Central Station. Michero and Roland 
set up shop in the imposing skyscraper that overlooked New York's 
most prestigious thoroughfare and shared a suite at the Commodore . 
Recalling that period, Roland spoke nostalgically of how he and Miche- 
ro patronized the seafood restaurant in Grand Central Station nearly ev- 
ery day to enjoy a bowl of its famed clam chowder at lunch. Their 
duties found them working closely with representatives of the Chemical 
Bank and Chase Manhattan Bank, which were involved in the financial 
affairs of the company. They also spent considerable time developing 
Wall Street contacts, which Charles Tandy then followed up. 

"Charles kept real close tabs on us," Roland reported. "He'd pop in a 
couple of times a week. We never knew when he was coming. We 
might still be in our office at 7 o'clock at night, when he would come 
in and we'd begin talking. He wanted us to fill him in on what we were 
doing and he'd bring us up to date on what was going on in Fort Worth. 

"0„-x 1 _!.-,«-, o 1~r-jJ ««**> ^"U^^^ro *w -t-lw^f* r ^-4- Tin YkT£**A Vaan ialVinrr fill 

JDUL 11C aiway& JUaU new miuga vu imuvv at ua. yv ^ v* ivw^ Luiivx*i£ ni* >- 

or in o'clock, and then Charles would finally say 'Let's get something 

• * . 1 v-1 * 1 -X 7"11 .. „ _ _ „ J _x 

tO eat. /VI1U We U gU IU a ICSUtUIOiil UUWU ill UlCCllwiwi v mag^, anu a,t 

3 o'clock in the morning we'd still be sitting there talking. Bill and I 
would get up at 7 o'clock the next morning to go to the office, but 
Charles might not show up until ll or 12. But that's the way he was." 
After the move of the General American corporate headquarters to 
New York, Tandy lost no time in getting rid of the companies that had 



SAVING THE FAMILY JEWELS 81 

been acquired by the previous management. "He felt they weren't ever 
going to contribute a heck of a lot to the organization," Luther Hender- 
son said. 

The dismantling process began with Musgrove Petroleum Corpora- 
tion in line with the agreement Tandy had made with Pierce Musgrove. 
The Musgrove Petroleum assets were sold to Pierce Musgrove and his 
associates on December 28, 1959, for $1,250,000, of which $1 million 
was paid in cash and the balance in secured, interest-bearing, 3 -year in- 
stallment notes. Involved in the sale were 210 oil wells, located mostly 
in Kansas, producing 20,000 net barrels of oil per month and approxi- 
mately 100,000 acres of undeveloped leases. 

Shain and Company was put on the block on March 30, 1960. Its as- 
sets were sold to Fred G. Folts and associates for $350,000. "Shain' s 
highly specialized operations, vulnerability to changes in footwear styl- 
ing, and limited accretion of earnings in cash did not permit it to devel- 
op the potential expected of it as a division of General American 
Industries," Tandy said in announcing the sale. 

The final divestiture took place on April 19, 1960, when the assets of 
Dunbar Kapple, Inc. were sold to the D-K Manufacturing Company of 
Chicago for $1 million in cash. As part of the deal, General American 
also bought back 143,376 shares of General American stock held by 
former Dunbar Kapple stockholders at a cost of $681,036, or approxi- 
mately $4.75 per share. 

Commenting on the sale of the three subsidiaries in a letter to share- 
holders, Tandy stated: 

"While the losses incurred in the disposal of three operating units will 
considerably affect earnings this year, it must be noted that these moves 
are part of a program which, by June 30, 1960, will have eliminated the 
divisions of less stability while retaining well-seasoned operating units 
with substantial profit records, a strong balance sheet, greatly reduced 
indebtedness, a simplified corporate structure, reduced administrative 
expense, and a cash position permitting the consideration of sound ac- 
quisitions or expansion programs. 

"Tandy Industries, with its chain of 109 company-owned stores serv- 
ing the educational and recreational markets throughout the U.S. and 
Canada, continues its scheduling of new outlets. The Tex Tan division, 
through its growing sales organization, is enjoying a good reception of 
recently-installed techniques in the marketing of its fine leather acces- 
sory and saddlery lines." 



82 SAVING THE FAMILY JEWELS 

Having rid himself of the albatrosses around his neck, Tandy pro- 
ceeded to satisfy his long-held desire to move the corporate headquar- 
ters to Fort Worth. The site that he selected was at 1001 Foch Street, in 
a warehouse district on the city's near west side close to West 7th 
Street, a major thoroughfare. The move took place in the latter part of 
May, 1960. 

Bill Roland described the new headquarters. "It was a pretty good- 
sized office," he said. "Charles Tandy sat at one end and Dave Tandy at 
the other end, facing each other. The American Handicrafts warehouse 
backed up to where they sat." 

Stories in the Fort Worth news n apers on Ma v 20, 1960, announced 
the move and quoted Charles Tandy as stating that the relocation placed 
the General American headquarters closer to its two subsidiaries, Tandy 
Industries of Fort Worth and Tex Tan of Yoakum. 

On the same day, May 20, the Wall Street Journal carried a short 
item reporting the resignation of Stanley M. Rowland as president and 
director of General American Industries, Inc. Four days later, on May 
24, the Journal reported that Rowland had sold 5,690 shares of General 
American Industries stock, decreasing his holdings to 400 shares. 

As the 1960 fiscal year came to an end on June 30, Tandy was faced 
with reporting some bad news. The disposal of the three money-losing 
divisions created a net loss of $366,151, which, in turn, produced an 
overall net loss of $267,689, or 17 cents per share, for fiscal 1960. This 
compared to a net profit of $1,174,483, or 68 cents per share, in fiscal 
1959. Sales also had fallen sharply, from $24 million in 1959 to $20 
million in 1960. 

On the positive side, Tandy informed shareholders, "The earning 
power of the remaining divisions is substantial. It is anticipated that the 
Company will report regular profits and maintain a strengthened finan- 
cial position in the fixture." He also reported that the Tandy Leather Di- 
vision planned to open two new retail stores during the first quarter of 
the 1961 fiscal year in Rockford, Illinois, and Syracuse, New York, and 

f-TU^f % nrtAA»-.J XTp-jT- V^^-l,- f^ifxr nfr\-t*Qi vr//yii1r$ r\r^pr\ im parly T^/^ArnKpr r>f* 

I960 on the Avenue ot tne Americas oetween 45rd and 44th Streets. 
The new store in mid-town Manhattan, Tandy said, would feature a 
broad stock of merchandise from each division of the company and en- 
joy the largest foot-traffic of any store in the system. The three new 
openings would bring the total number of Tandy Leather retail outlets 
to 119, including six in Canada. 



SAVING THE FAMILY JEWELS S3 

On June 24, I960, Charles D. Tandy was given the additional title of 
president of General American Industries, Inc., and on July 18, 1960, 
the election of James L. West as president of the Tandy Leather Com- 
pany was announced. West was beginning his fourth decade of service 
with the company. 

A year had now elapsed since the Tandy forces had gained the upper 
hand in the battle for control of General American Industries. Now, 
with the annual meeting coming up on November 10, 1960, in Fleming- 
ton, New Jersey, Charles Tandy immersed himself in the pleasure of 
preparing for the final act of the drama, the eradication of the one re- 
maining symbol of the entire abhorrent episode. 

There were two items on the annual meeting agenda. The first was 
the election of directors. Management submitted a seven-man slate that 
included incumbents John B. Collier, Luther Henderson, Charles Tandy, 
Carl Welhausen, Jim West, and Alfred H. Hauser, plus a new nominee, 
Lawrence E. Dempsey of Chicago, executive vice president of Price 
Brothers, Inc., manufacturers of display and directional signs. Demp- 
sey, a former vice president of Dunbar Kapple, was the holder of 
60,627 shares of General American Industries stock. On a motion from 
the floor, the seven nominees were duly elected. 

The second item on the agenda was the one Tandy had been awaiting 
with great anticipation. It reached the floor shortly after 3 p.m. as a mo- 
tion was made to change the name of General American Industries, 
Inc., to Tandy Corporation. The primary reason for the name change, 
shareholders were informed, was to "capitalize on and identify with the 
many Tandy stores throughout the country." 

Once again, it fell to Judge Edwin K. Large, Sr., serving as an inspec- 
tor of elections with his son, Edwin, Jr., to announce the results. 

"Mr. Chairman," he intoned, "on the motion, there are 1,147,095 
votes in favor and 18,570 votes opposed. The motion carries." 

The final tie to the American Hide and Leather episode had been cut. 
The old Tandy Leather group had its name back, a fitting crown for the 
victory it had achieved a year earlier. 

On Monday morning, November 14, 1960, a long, black limousine 
braked to a stop outside the New York Stock Exchange Building on 
Wall Street and an exuberant Charles Tandy bounded out. A few min- 
utes later, he stood on the floor of the exchange and watched the first 
trade of Tandy Corporation stock clear the tape at a price of $4 per 
share under the symbol, "TAN." 



84 SAVING THE FAMILY JEWELS 

The lad who once had sold strips of leather to his schoolmates for a 
dime was now one of a handful of people, living or dead, to have a 
stock with his name listed on the Big Board. 



Chapter 6 

"He Could Sell Iceboxes 
to Eskimos" 



Charles Tandy had gambled and won. He had his company back, plus 
the coveted listing on the New York Stock Exchange that almost cost 
him the family business. Now he faced the task of convincing the 
Doubting Thomases on Wall Street that the company bearing his name 
was a sound investment. What good was a stock exchange listing when 
the stock was languishing at $4 a share? 

"After we got control of the company, the stock didn't do anything 
for a long time," Lloyd Redd, then a Tandy Leather store manager in 
Omaha, recalled. "It made me pretty nervous because I had all of my 
assets in Tandy stock." 

Redd recalled a book, "The Richest Man in Babylon" whose chief 
character believed in investing 10 percent of everything he earned. 
"Charles believed in that," Redd said. "He preached it. He practically 
forced us to invest in company stock. He wanted us to have as much of 
an equity in the company as we possibly could." 

Around bonus time every year, Redd said, "Charles would come up 
with another idea for us to buy stock at a little bit better than the market 
price. And once you got the stock, you didn't dare sell it because of the 
pressure he put on you to be a stockholder." 

Other longtime employees echoed a similar refrain. 

Billy Roland, who made his first stock investment in 1955 with 
$1,000 he borrowed from Dave Tandy at 6 percent interest, remem- 
bered how worried he was over how he was going to repay the loan on 
his $325-a»month salary. 

"Charles always wanted you to buy stock," Roland said. "The more 
stock in employees' hands, the better. That was always his philosophy. 
Charles especially wanted his key executives to own as much stock as 
possible and he initiated a program on his own where he backed them 

85 



86 "HE COULD SELL ICEBOXES TO ESKIMOS" 

personally to get loans at the bank. He wanted them to be 'socked up to 
the hilt' That was his expression. He talked to the bankers to get the 
arrangements for the loans made." 

John Wilson recalled how Tandy applied pressure on his store man- 
agers to buy stock with their year-end bonuses. "At bonus meetings, 
when it came time to distribute the bonus checks, Charles would al- 
ways let it be known that you had an opportunity to buy some stock," 
Wilson said. "I'll never forget the time I was getting ready to leave 
Denver to go to a bonus meeting in Albuquerque, and my wife said to 
me, 'Please don't spend all your bonus money on stock because we 
need a new divan.' And we did. I mean the one we had was really 
ragged. I said, 'Well, I won't make any promises, but I'll sure try.' 

"I was operating the largest sales volume store in Denver at the time 
and Charles called on me first to come up and pick up my check or sign 
up right there for stock. You can guess what happened. He wasn't 
about to let me off the hook and set a bad precedent for the others. So I 
signed up for stock. There were, maybe, 15 or 20 store managers at that 
bonus meeting and I don't think there was a one of them that turned 
Charles down. They each laid on the line every penny of their bonus 
money, and let me tell you when you're working for $250 or $300 a 
month that was a big step. The average bonus in those days was $3,000, 
$4,000 or, maybe, as high as $6,000. We bought the stock at, maybe, $4 
a share. There have been eight or nine stock splits since that time." 

When Wilson returned home without his bonus check, he received a 
less than cordial greeting from his wife. Her attitude softened, however, 
as Tandy stock began to soar and split. "She and I laugh about it now 
and we talk about it frequently," Wilson said. "We both were born in 
poverty. Her family was on relief during the Depression. My family 
was never on relief, but we were plenty hard up. We never dreamed 
what would happen, that we would wind up with stock worth 10 to 12 
million dollars." 

Wilc^n rpppllpH thai Via rp<-p>ivprl 900 charge of TanHv stock flt the 

meeting in Albuaueraue for comine in second in a regional sales con- 



_» __.i_: _1- — l T\^ 

J. llOt UllZiV, VV1AXV/JL1 VVUO VVVil \J J JU^v/WJix uwtr ivnv 



ager, was a new compact car. "That was one time when coming in 
second best was better than winning," Wilson said. "The car was proba- 
bly worth 2 or 3 thousand dollars and the 200 shares of stock was 
worth $800. Now those 200 shares are worth about $1 million." 



"HE COULD SELL ICEBOXES TO ESKIMOS" S7 

One of the first indications that Wall Street was beginning to recog- 
nize Tandy Corporation's potential was a report issued by Standard & 
Poor's Corporation on November 25, I960, recommending Tandy stock 
as a speculative investment. The report aroused an immediate reaction 
from Charles Tandy. 

"At last some of those dumb bastards (Tandy's favorite word for se- 
curities analysts) have finally figured out what we're doing and where 
we're going." 

Standard & Poor's noted that Tandy Corporation was the country's 
largest manufacturer-distributor of leathercraft kits and leather specialty 
items, selling about half of its output by mail order to some 300,000 
customers, with the remainder of its sales coming from its chain of 
some 118 retail stores located in 42 states, the District of Columbia and 
Canada. Although the company's sales and earnings had been adversely 
affected by the divestiture of three subsidiaries, the disposition of the 
unprofitable entities placed Tandy in a position to realize a satisfactory 
profit in fiscal 1961, the report said. It concluded, "Long-term, the in- 
crease in leisure time and the growth of both the younger and older seg- 
ments of the population are constructive factors in the outlook for sales 
of hobby materials. The issue offers some speculative possibilities." 

Tandy Leather customers were schools, prisons, hospitals, sanitari- 
ums, "everybody who was a shut-in," Lloyd Redd said. "The school 
business was the thrust of it, because you not only got the business that 
you sold the schools, but you got the students who learned how to do it. 
Mail order was our big business. We put out two catalogs a year and a 
sales flyer every 45 days." The other Tandy division, Tex Tan, was a 
leading producer of ready-made leather merchandise, including a large 
line of high-style leather fashion goods such as belts, wallets, key cases 
and saddlery. One big selling item was a patented billfold for people 
who carried a large number of credit cards. 

"Put your trust in a worthwhile leisure time activity for Americans 
and you're pretty sure to make money," Tandy was quoted in a story 
that moved across the United Press International news wires early in 
1961. "The catch in Mr. Tandy's advice," the story went on to say, "is 
that word 'worthwhile.' Lots of wise businessmen are aware that Amer- 
icans have huge amounts of money to spend on leisure activities and 
keep dreaming up schemes to make a fast buck out of it." To this com- 
ment, Tandy retorted, "You must avoid fads like the hula hoop or 



88 "HE COULD SELL ICEBOXES TO ESKIMOS" 

il:_^ ai--xs„ i-~~ ™ :,.~ .r ~* r«iu~ ;.c — > — ~ rt :~~ +~ u,,;i^i « 

SUlJUCUUlIg Ulcll S LUU CApCXl&iVC IU1 lliU&L 1U11V0 II )UU iC gUlilg lu uunu a 

solid, growing business." 

In 1961, convinced that growth was the name of the game, Tandy 
embarked on an acquisition program. Cleveland Crafts, Inc., of Cleve- 
land, Ohio, a distributor of handicraft and educational supplies with 
stores in Cleveland, Los Angeles, Nashville, and New York City, was 
acquired in May, and Corral Sportswear of Ardmore, Oklahoma, a man- 
ufacturer of leather sport and western clothing, was added to the fold 
later that month. 

Over the next six months, four additional acquisitions were 
completed — Merribee Embroidery Company of New York City; the 
Electronic Crafts Division of Swieco, Inc., of Fort Worth; the Plexon 
Corporation of Greenville, South Carolina; and Toys for Men, Ltd., of 
Honolulu, Hawaii. To facilitate the expansion program, the board had 
authorized the redemption and retirement of the remaining 9,269 shares 
of 6 percent cumulative convertible preferred stock at $55 a share, ef- 
fective January 31, 1961. This freed more than 48,000 shares of com- 
mon stock, previously reserved for conversion of the preferred stock, 
for use in future acquisitions. The company also began buying its own 
stock in the open market in moderate amounts, with the shares being 
earmarked for acquisitions. 

Jim West recalled that it was during this period that Charles Tandy's 
merchandising talent really began to assert itself, as he utilized re- 
sources within the various divisions to develop new products for the 
other divisions. In a talk at a Newcomen Society dinner, West remi- 
nisced about a saddle kit the Tex Tan group developed for the Tandy 
Leather Company. 

"I believe this item was one of the first full-size, high-quality saddles 
ever developed in kit form. The publicity received on this one item 
more than matched the development cost. Among the first customers 
for the saddle kit was a YMCA summer ranch in Texas. The boys made 

craftsmanship and quality and relived some ot tfte romance ot tfte old 
West while making saddles. Average age of the boys was 15. At the 
same time, American Handicrafts was busy developing new kits and 
markets for tile, and introduced a new liquid plastic called Clear Cast." 
Tandy had been demonstrating his merchandising touch to his hired 
hands ever since his return from the Navy. 



"HE COULD SELL ICEBOXES TO ESKIMOS" 



89 



"He was some merchant/' said John Wilson with a touch of awe in 
his voice. "He could sell Eskimos iceboxes. He could sell anything and 
he taught his people how to sell. He also was the greatest motivator I 
ever met." 

Wilson, who managed a Tandy Leather store in Denver before mov- 
ing to Fort Worth in 1961 to become western regional manager, re- 
called an incident that demonstrated Tandy's motivational prowess. 

"I'd gotten carried away buying inventory for the Denver store and 
didn't have any money left in the bank. When the weekly paychecks ar- 
rived from Fort Worth on Saturday morning, there was a note attached 
to mine. It said, These checks will be good only if x number of dollars 
in cash are deposited in the bank on Saturday night. Otherwise, don't 
bother cashing them Monday morning.' Now there was an incentive to 
rack up some sales on Saturday." 

Wilson remembered one of Tandy's favorite exhortations, "If you've 
got a lemon, make lemonade out of it. Make a sale out of it." And he 
told the story of how he once followed this sales tip to move a large 
quantity of pliable goatskins in the late 1950s. He had acquired the 
skins from John Ellis, who was then the manager of the Tandy Leather 
store in Los Angeles. 

"John had access to a lot of smaller tanneries out there and had 
bought a lot of this beautiful leather. He had really loaded up on the 
stuff at 10 cents a foot. It was really beautiful stuff. The skins were real 
pliable. You could make jackets out of it, almost anything you wanted. 
I was out there on vacation and, of course, I always visited stores wher- 
ever I was. And John asked me if I wanted to buy some of the skins 
from him, and I jumped at the chance. So I had him ship the skins to 
me in Denver. 

"I put three or four bundles of these skins out on a special table we 
kept for special deals, and put up a big sign, '39 cents a foot.' Maybe 
we sold two or three skins a day. This went on for a couple of weeks 
and I couldn't understand it. It was such a great buy. Then I thought 
back to what Charles Tandy had taught me one time, 'You've got to 
make the public think it's scarce.' So I took all the bundles back to the 
back of the store and brought out half a bundle and put up a sign that 
said, '69 cents a foot while they last.' We sold all of the skins we had 
in two weeks. Unbelievable." 

Working for Charles Tandy wasn't all sweetness and light, however, 
Wilson emphasized. "He could be real rough on you. He could give 



90 "HE COULD SELL ICEBOXES TO ESKIMOS" 

you a lambasting up one side and down the other, but before he left the 
room, you wanted to hug his neck. He'd say to you, 'You dumb so- 
and-so, I can't believe you're that dumb, Wilson.' You'd look at him 
kind of funny and he'd get a twinkle in his eye and come over and put 
his hand on your shoulder, and by the time that he left, you were walk- 
ing on air." 

Wilson smiled as he relived old memories. 

"He was very strong on inventory control, and he would deliberately 
pick on someone he knew he could pick on to make a good example. I 
was one of them. He knew I wouldn't get too mad or walk away. He 
liked to tell people the story of how I once screwed up on my craft tool 
inventory. I had purchased way too many craft tools, and he came 
to Denver. 1 knew 1 had too much inventory because we were working 
a real slim inventory. You needed to turn your inventory. I turned 
mine 18 times in one year. But you couldn't do that if you had all your 
money tied up in craft tools. I had a big rack of them. I'll never forget 
this. I just knew I was gonna get fired. 

"Charles walked in and said, 'Hello,' and the usual greetings, and he 
kept edging toward that craft tool rack. I already knew I'd made a hel- 
luva mistake. He walked over there and he said, 'Looks like you got a 
pretty heavy inventory.' Real calm. Now this is the way he handled 
things. He wouldn't jump right on a guy's back when he knew that the 
guy knew that he was guilty. 'It looks like you've got a pretty hefty in- 
ventory there,' he said. 

'Yessir.' 

'Well, I think you ought to send most of those back to the warehouse, 
don't you?' 

'Yessir.' 

"That's all that was said about it. And he liked to tell that story at 
store manager meetings with me in the audience. But that's the kind of 
guy he was. It wouldn't take him two minutes to tell what you were 
over-inventoried in. He taught us how to turn our inventory. When I 

V >.. 1 ii. *..»\. L* *.* V J^:. y <•■■-< "■' V 'j' '-^""^Q '.'"-I*. C? J. \,< l.i .*. 1 J ,..? \J 1.J .». .1 >: ?. j....' J *„■ < * ,' ■" \.., '.. J ': .': ': ?. * 1^ W \„- ,..? ".. \J -■..., ,A. «,,- \. * 

came out ot me warenouse. wny oraer six montns or cowniae/" 

The thing that impressed Lloyd Redd the most about Charles Tandy 
was that he forced his people to think big. "He set goals and he moved 
heaven and earth to get those goals achieved on time or ahead of time. 
And, then, if you achieved the goals he'd made you set, he'd say, 'Why 



"HE COULD SELL ICEBOXES TO ESKIMOS" 91 

in hell did you set it so low?' You never satisfied him. It was his way 
of making us all do our best. He could come in and fire you up to really 
achieve. He had a real knack for that. Another knack he had was the 
ability to look at a profit-and-loss statement and spot a weakness in it 
just like a neon sign. He'd do that before he came into your office. 
Then he'd ask you leading questions. Every time he opened his mouth, 
it was a question. And he knew the answers to the questions before he 
asked them. He'd make you look like you weren't on the ball and then 
he'd get after you. And you'd want to prove to him that you weren't 
that dumb." 

Tandy's toughness on his managers was legendary, and they often 
compared notes among themselves. Redd recalled Charles striding into 
his office right after he became a Tandy Leather regional manager in 
Fort Worth and picking up a national sales report that showed the store 
in Little Rock, Arkansas, had had a sales loss that week. Tandy 
slammed shut the door and demanded, "What in the hell is Mr. Sim- 
mons doing, liquidating the business in Little Rock?" Then he told 
Redd, "My job is to inspire you guys, and I've failed. When are you 
guys going to get your head out of your ass and get to work?" 

The tirade went on from 9 o'clock in the morning until about 2:30 in 
the afternoon, Redd related. "Before he got out of there, we'd covered 
government sales, school sales, every avenue that you could possibly 
get some leathercraft business out of. He gave me tons of ideas. That's 
what he was really doing, and you can bet your bottom dollar that I 
pursued all of those ideas to try to find out where I could get more busi- 
ness. That's the way he did it. That was his way of motivating people." 

Redd remembered another incident when Tandy Leather had experi- 
enced a dip in sales and Tandy called in all of the company's top exec- 
utives for an early morning meeting. Tandy looked around the room, 
where Harlan Swain, John Wilson, Redd, and several others were seat- 
ed. He was puffing furiously on his cigar, and he barked, "How much 
money is represented in this room?" Then he went around the room, 
making each man state, in front of his peers, how much money he 
thought he was going to get paid that year in salary and bonus. 

After everyone had given his forecast, Tandy growled, "You're all 
wrong. For the kind of money I'm paying you bastards, I can expect 
what? How long does it take the New York Yankees to jerk the pitcher 
when they're losing the ball game? Do they wait until the ball game's 



92 "HE COULD SELL, ICEBOXES TO ESKIMOS" 

lost before they take the pitcher out? You guys are liquidating the busi- 
ness." He went on and on. 

"We were there all day," Redd reported, "with him browbeating us all 
the way. But, in the process, he covered every conceivable angle and 
brought up things that none of us had thought about that we could pur- 
sue and, maybe, get some business out of." 

One of the things that has remained strongly in Bill Vance's memory, 
however, is that Tandy would come down hardest on his managers 
when their sales and profits were up rather than when they were down. 
"If you had a 60 to 70 percent increase in sales and your profits were 
up 30 to 40 percent or whatever, you just knew you were going to be 
seeing Charles very quickly and that he was going to be all over you," 
Vance recounted. 

"Damn, is that the best you can do?" Tandy would demand. 

The store manager would reply, "Charles, 60 percent ain't bad." 

"That's nothing, that's peanuts," Tandy would retort. "If you can do 
60 percent, why can't you get 100 percent out of it?" Tandy would then 
begin throwing out ideas on what the manager could do to increase his 
sales and profits. 

"This was one of his keys," Vance said. "He knew that he knew how 
to think. Now he tried to teach you how to think. He'd ask you a ques- 
tion about your expenses or your sales forecasts, and you'd give him an 
answer, and he'd say, Ts that your best guess?' Then he'd proceed to 
inform you that you didn't know what you were talking about. That's 
when he would really push you hard; but when he got through, he'd 
start telling you how 'You can do this' and 'You can do that.' 'You've 
already done this, so you can sure do that.' 'We've already agreed you 
can do this, so just go out and do that.' 

"First, he ripped you up. Then he put you back together again and got 
you optimistic. So when he left, you weren't thinking so much about 
the scolding you got, you were thinking about how you were going to 
climb this mountain. And, oftentimes, when he was getting ready to 

other shoulder with his big tist and say, "uo get em, tiger.' 

"But if you were really having trouble, when your sales were down 
about 20 or 30 percent and you'd been working your heart out, as most 
of us did, Charles never scolded you. He never scolded me or anyone I 
was around when things were tough. And I heard him talk to a lot of 



"HE COULD SELL ICEBOXES TO ESKIMOS" 93 

people over the years. Mostly, he was trying to help you figure out what 
was wrong. He would start a series of questions, 'What if you did this?' 
'What if you did that?' and he'd get you to thinking. Before he got 
through, you would have a direction to take that promised better results. 
Until you got those results, Charles didn't do anything but try to help 
you. He was like a rock to lean on." 

In June of 1961, Charles Tandy was the subject of a personality 
sketch in a Sales Management Magazine series titled, "Dynamarket- 
ers." The article took note of Tandy's "unique claim to fame, that in a 
period when everybody is expanding his business, Tandy made money 
by contracting his business. By selling off profitless divisions, Tandy 
began to make money again." Publication of the article coincided with 
the Tandy stock hitting a high of $10 a share. The favorable comments 
continued with the publication, on October 19, 1961, of a bullish report 
by Shearson, Hammill & Company that said Tandy's "transition from a 
not-too-successful, ' catch-all' industrial company into an aggressive en- 
terprise with a strongly-entrenched position in the educational, hobby 
and leisure time markets is now reaching the pay-off stage." The report 
noted that Tandy would soon open its first Tandy Craft Mart in Fort 
Worth, which would incorporate a variety of small hobby shops in one 
large retail center on a leased department basis. "This move could open 
up entirely new markets for the company," the report added. 

The mart idea was the outgrowth of Charles Tandy's belief that the 
do-it-yourself movement had gained sufficient momentum to support a 
new merchandising concept. He was convinced, he told Jim West and 
Luther Henderson, that "mom and pop" specialty shops engaged in the 
sale of hobby-type merchandise, such as rockhounds, gourmet foods, 
ceramics and other related businesses, could operate under one roof and 
become a sort of family shopping center for hobbyists of every age. 

The first Tandy Craft and Hobby Mart opened with appropriate hoop- 
la in a new two-story, 18,000-square foot building at 2727 West 7th 
Street on November 1, 1961. Present at the opening ceremonies was 
Charles Tandy's former partner in the ladies' belt business, John Justin, 
then the mayor of Fort Worth. Billed as "America's first one-stop lei- 
sure time shopping center," the mart contained 35 different shops rep- 
resenting more than 50 crafts and hobbies selling more than 50,000 
craft and hobby items, all under one roof. In addition, on the mezzanine 
level, was space for the Tandy corporate headquarters. 



94 "HE COULD SELL ICEBOXES TO ESKIMOS" 

Tlie shoos offered everything from A to Z — artificial flower making 
to a Zip 'N Trim Shop. There was an aquarium and pet store, a record 
store and a joke store, a stamp and coin shop and a Sit 'N Knit shop, 
even a gourmet food emporium. Anchor tenants were Tandy Leather 
and American Handicrafts stores. There was also a portent of the fu- 
ture, a hobby electronics store called Electronic Crafts that sold do-it- 
yourself kits for making stereo hi-fi systems. 

Jack Gordon, columnist for the Fort Worth Press, reported: "Crowds 
at the new Tandy Hobby and Craft Mart are fascinated by the battery- 
powered toy bartender at Jack Mayfield's The Joker. The foot-high fig- 
ure from Japan shakes up a martini, pours it, drinks it, smacks its lips, 
and then turns red in the face. A bad olive, perhaps?" 

Tony Slaughter, a columnist in the rival Star-Telegram, reported: "A 
lot of monkey business has been going on around this town in the last 
three weeks. That's when Freeland's Pet Shop opened in the new 
Tandy Hobby and Craft Mart on W. 7th. The shop seemingly has been 
keeping the South African banana boats busy hauling in squirrel and 
Capuchin monkeys to meet the demand for the 6-month-old jungle in- 
habitants. Maybe people bought them for Christmas presents. Anyhow, 
Fort Worth people in the last three weeks have bought more than 150 
monkeys." 

More than 20,000 visitors thronged through the mart during its initial 
week of operation. As part of the opening promotion, Tandy offered to 
redeem food wrappers, labels and bottle caps from Fort Worth-made 
products. More than 200,000 bottle caps from soft drinks bottled in Fort 
Worth were collected during the opening month. For every 10 bottle 
caps turned in, Tandy applied one cent, with a maximum of $1, on a 
merchandise certificate. 

As 1961 wound down, the resurgent Tandy stock hit another high of 
ll 3 / 8 on December 20 before closing at 11, a gain of $1 per share 
on the day. The 10 percent one-day jump captured the attention of The 
New York Times, which carried an item about it the next morning. 

0»C/ V \Jx,iXk i WUV>i tb tit/V/tib UljlC vv>ij.AUUli J VV Civ XXX viivUiUkiwiij i-ii-v jL entvu 

said. "One spoke of the success of the first of a chain of 'hobby cen- 
ters' opened in Fort Worth a month or so ago. Others are being opened 
on a leased-department basis in other stores. This news, however, was 
somewhat old, and the market appeared to get its main drive from two 
rumors. The first one spoke of an imminent acquisition. One Wall 



"HE COULD SELL ICEBOXES TO ESKIMOS" 95 

Street house said it had asked the company about this and had been told 
that nothing was imminent. The second rumor had the Boy Scouts of 
America 'signed up to distribute Tandy's handicraft kits.' This was de- 
nied by the director of the National Supply Service Division of the Boy 
Scouts of America and by the administrative assistant to the Chief 
Scout Executive." 

Not that Tandy was averse to having Boy Scouts or any other orga- 
nized group hustle his products, as two prominent Fort Worth business- 
men, John Roby Perm and Joe W. Lydick, attested. Penn enjoyed 
telling the story of how he and Lydick asked Tandy to sponsor a Junior 
Achievement company. 

"Charles had never heard of Junior Achievement, which was getting 
started in Fort Worth," Penn said. "After we explained how it worked, 
he asked if they could make things out of leather. When we told him 
they could, he really got fired up and asked, Tf I gave them all the 
leather, could they all make leather?' Before we were through talking, 
he was envisioning making it a statewide deal. He was ready to call 
Carl Reistle, the president of the Humble Oil Company, who was then 
the volunteer head of Junior Achievement in Texas." 

Penn laughed. "Charles could see how every kid in Texas would 
grow up doing leathercraft. 'You guys have a nice idea. Now I'll take it 
over.' That's how his mind worked. We had to tell him that we couldn't 
turn over Junior Achievement to him." 

Tandy Corporation did, however, become a Junior Achievement 
sponsor and has continued its support of the program since that time. 

The Tandy Craft and Hobby Mart had one flaw, as it turned out, a 
lack of adequate parking space. Business was so good that gigantic traf- 
fic jams became a daily occurrence on West 7th Street. A quick move 
was dictated, and on April 12, 1962, the mart re-opened at a new loca- 
tion beneath a bowling alley at 1515 South University Drive, with dou- 
ble the floor space of the West 7th Street site and greatly increased 
parking facilities. In addition to crafts and hobbies, the new mart also 
contained an Italian restaurant, a Mexican restaurant, and a sandwich 
bar. 

At the opening of the new mart, an enthusiastic Tandy declared: 
"When we opened the Tandy Craft and Hobby Mart on West 7th street, 
it was an experiment in retailing, grouping craft, hobby, and related 
specialty shops under one roof to provide a leisure time city for resi- 



96 "HE COULD SELL ICEBOXES TO ESKIMOS" 

dents of North Texas. Frankly, we were not certain, at the outset, of the 
public response the mart would receive. It's certainly gratifying that af- 
ter only four months of operation we've had to move into quarters 
twice as large as the original mart, with many times more parking." 

The Tandy Mart was a dream Charles long had harbored "to put all 
those companies in one pot/' Jim Buxton said. "After they moved un- 
derneath the bowling alley on University Drive, it just went hog wild. It 
looked so promising that Charles began looking around in Houston and 
Dallas for a second mart, and I began looking in San Antonio." Buxton 
was then a Tandy Leather district manager in San Antonio and also 
manager of Tandy Leather and American Handicrafts stores there. 

The second Tandy Mart opened in Dallas on the first two floors and 
basement of the Praetorian Building in the downtown area in November 
of 1962. 

"Charles then came down to San Antonio and rented a 43,000 square 
foot building for a third mart," Buxton reported. "At that time, the cor- 
poration was doing about $17 million in sales overall. I think my leath- 
er store in San Antonio had done about $160,000 or so that year and 
American Handicrafts about $50,000 or $60,000, and here Charles rents 
43,000 square feet. Neither Luther Henderson nor Jim West would sign 
the lease. Charles said to me, 'You keep two airplane tickets handy. If 
this doesn't work, we're gonna have to go to Mexico. You'd better get 
your butt out and try to rent space to some other businesses.'" 

The San Antonio mart, called Tandy's Wonderland, opened in the 
Wonderland Shopping Mall in September 1963. It featured a huge sign 
out front that simply said, "Tandy's." The sign, 14 feet long and 50 feet 
high, immediately became a local landmark because it was located on 
the dead center of one of the approaches to the San Antonio municipal 
airport, about 2 l A miles from the runway. Airline pilots would come 
into the mart and tell Buxton, "We saw your sign and here we are." 

# $ % 

Things were on a definite upswing as the fiscal year ended on June 

~>U, i>OZ, Willi ilCciitiiy KiCi CaSCS Hi DO ill SaxvS tUivi CtiiiiliigS. INCi HICGiiiC 

of $980,000, or 63 cents per share, represented a 36 percent gain over 
the previous year. Sales had risen 11 percent to $17.7 million. There 
were now 140 company-owned retail and mail-order stores in 1 10 cities 
in the U.S. and Canada, including a new Tandy Crafts store at Fifth Av- 
enue and 36th Street in New York City. Reporting on the opening of 



"HE COULD SELL ICEBOXES TO ESKIMOS" 97 

the new outlet in mid-town Manhattan, Charles Tandy said, "Some of 
the stores opened during the past year have been placed in 100 percent 
retail locations as opposed to the semi-wholesale type of store location 
normally leased by the company. The outstanding example of this new 
type of location is the Tandy Crafts store opened in June on Fifth Ave- 
nue at 36th Street in New York City. The Fifth Avenue store features 
the merchandise of four separate divisions of the company and the sales 
trends being experienced there may presage future stores of a similar 
type and location." 

In early September of 1962, Tandy Corporation shareholders were 
notified of a recapitalization plan for the company that Shearson, Ham- 
mill & Company called "unusual, imaginative, and constructive." Un- 
der the proposal, which was subject to shareholder approval at the 
annual meeting in November, stockholders were given the opportunity 
to exchange part or all of their shares for 6/2 percent debentures with 
a face value of $7 for each share tendered, plus warrants permitting the 
holder to buy 49 common shares for each 100 shares surrendered at 
a price of $7.50 per share between January 1, 1965 and December 31, 
1967, or at $9 per share between January 1, 1968 and December 31, 
1969. The offer was subject to tender of a minimum of 300,000 shares 
and a maximum of 500,000 shares. 

Commenting on the proposal, Shearson, Hammill stated, "The plan 
proposed by Tandy's directors will give stockholders the opportunity, 
by means of the interest on the debentures, to obtain some income on 
their investment while at the same time enabling them to maintain a 
stake in the long term growth of the company through the warrants. The 
company has not paid any cash dividends on its common stock since 
1959. On the other hand, the recapitalization proposal is designed to re- 
duce the number of outstanding shares and to increase the leverage on 
the remaining equity, thus, in effect, adding to per share earnings." 

The Dow- Jones newswire quoted Charles Tandy as asserting that the 
company had devised the exchange to reduce the number of common 
shares outstanding and to provide stockholders income on their invest- 
ments. "During the 1950s, Tandy's predecessor company, General 
American Industries, Inc., issued more than 1,000,000 shares for three 
acquisitions," Tandy explained. "These acquisitions were later sold, 
creating the tax loss that benefited recent earnings and leaving an un- 
workable number of outstanding shares. In addition, Tandy Corporation 



98 "HE COULD SELL ICEBOXES TO ESKIMOS" 

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ceive interest payments anci warrants to buy common snares later." 

Shareholders at the annual meeting on November 8, 1962, approved 
the proposal, which required the tendering of at least 300,000 shares of 
stock by January 2, 1963. 

On December 12, Corporate Secretary Bill Michero reported that 
240,112 shares of Tandy common stock had been turned into be ex- 
changed for debentures and warrants, and that none of the shares ten- 
dered had come from company officers or directors. "This assures the 
success of the offer," he declared. 

However, on December 31, Tandy announced it was extending the 
deadline for the exchange to January 30 from the original date of Janu- 
ary 2. Michero reported that 285,000 shares had been surrendered 
through December 27, exclusive of participation by directors. He added 
that the extension would not alter the January 15 commencement date 
of interest on the debentures and that issuance of warrants and deben- 
tures would begin January 15. 

In all, 500,123 shares of common stock were surrendered by share- 
holders, reducing the number of shares outstanding from 1,561,061 to 
1,060,938. A total of $3.5 million of 6 l A percent debentures due in 
1978, plus warrants to purchase 245,000 shares of common stock, was 
issued in exchange for the common shares tendered. 

Recalling the event, Bill Michero pointed out that the debenture 
and warrant offerings were a response by management to "louder and 
louder clamor from the stockholders for some kind of recognition of 
their interests. It was done to satisfy and placate those shareholders 
who were weary of seeing no dividend and the price of the stock flat in 
the market, who wanted something for their money. And with the pas- 
sage of time and the development of earnings of the company, those 
warrants, which were traded separately, took on a greater and greater 
value." 

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JLCAJL U1V WiJ.lL/lVHV/li V/l MAW VAWUUUtV, HIV WVillL/UAljl »» C*U XJLV/ V It UV/Ol 

tioned for sharply increased earnings per share, plus sales growth from 

......... r ...*. • ... , -. -.. „ ..-- a.* - -..j jQ.^^,1 z^ijLi t->„_x ;.„ jJL ~ „jcxr__ „ r .,.i_ _ 

U/vxotxxxg upviauuiio cuxu. luiuivi cix<v^u.xoxcxv/xxa. x-/u.l xix lj.iv uiuv^ ui uiv 

president and CEO there was a curious absence of euphoria. People be- 
gan to speculate on what was bothering the boss. 

Luther Henderson described what had begun to temper Charles 
Tandy's enthusiasm and normal joie de vivre. 

"Here he was, in control of a New York Stock Exchange-listed com- 
pany, with a beautiful little business in the leathercrafts stores which 



"HE COULD SELL ICEBOXES TO ESKIMOS" 99 

were laying golden eggs quite regularly, but only of a certain size. He 
began to recognize that there was a definite limit to the size of the 
leathercraft business. It was hard for Charles to accept this. He hated to 
accept the fact that the last 20 stores we had opened were doing only 75 
percent of the volume of the old stores. We had some open and frank 
discussion about this. But you could always show Charles the numbers, 
and if the numbers proved the point, he wouldn't argue. That's one of 
the great abilities that the guy had. In spite of being such a strong- 
minded person with such strong ideas, he would always listen. And if 
he was wrong, he'd admit it and change course. His pride was not so 
great that he'd do things his way, come hell or high water. In my opin- 
ion, that's one of the prime distinctions that made him a really great 
businessman. 

"But, anyway, recognizing that the company's horizons needed to be 
expanded, he consented to let me attend the Harvard Business School 
Advanced Mangement Program in 1960 to tune me into the bigger pic- 
ture and sharpen me up in preparation for a major acquisition program. 
After I got back from Harvard in 1961, my real job was to go out and 
look for companies to buy. We made a number of acquisitions, but no 
large ones. We bought two or three companies related to the leather 
business and a couple of companies related to the leathercraft business, 
but there just weren't very many to buy." 

Bill Roland recalled how Tandy and Jim West were constantly look- 
ing for something that would fit the Tandy business. "Jim and I would 
go to New York and we'd walk the streets looking for something that 
we could get into that fit with the leather business," Roland said. "Jim 
would stop at every little store and go in and talk to people. He saw 
knives in a store window and thought, 'Maybe this is something we can 
sell in our leather stores?' Jim loved to walk the streets. 

"What Charles wanted was merchandise that he could put into a na- 
tionwide store operation. He knew retailing and he understood buying 
power concepts of concentration of goods and then dispersing them 
through the store system. He was looking for merchandise that would 
really sell." Henderson added, "Two or three times we approached 
companies equal or larger than us and we were pretty thoroughly 
snubbed. I guess nobody had really looked carefully at our financial 
statement. We were turning out really successful profits." 

Unsuccessful in his efforts to find what he was looking for in the 
leather and leathercrafts fields, Henderson began to look around at oth- 
er enterprises, other industries. 



100 "HE COULD SELL ICEBOXES TO ESKIMOS" 

"Why limit ourselves," he said to Tandy. 

Tandy agreed. 

Unbeknownst to either Henderson or Tandy, a development was tak- 
ing place on the West Coast that would provide them with just the vehi- 
cle they were seeking. 



Chapter 7 

"Luther, I Don't Understand 
This Business" 



Lincoln Bartlett had a problem. The former J.C. Penney executive 
was managing Amthor and Company, an' import firm in San Francisco, 
and he was up to his ears in rattan furniture. He had to figure out a way 
to move it or eat it. 

Amthor and Company was a small wholesale house that dealt prima- 
rily in rice cloth wallpaper and rattan furniture brought in from the Ori- 
ent and sold to retailers in the Bay Area. It was a modest operation, 
with a net worth of around $150,000, that had been started by a San 
Francisco resident named Jack Amthor who was married to the daugh- 
ter of a wealthy coffee-growing family in El Salvador. Through his 
wife, Amthor had access to capital in El Salvador, and that was how he 
had managed to form his own company in the mid-1950s and had hired 
Bartlett to run it. 

Like most small businesses, Amthor relied on bank credit to get itself 
through its seasonal needs. It had been doing this for several years 
withoiit encountering any problems. By any measure, the company was 
doing reasonably well without setting the woods on fire. Then, in 1958, 
a problem arose. As sometimes happens to even the best-run compa- 
nies, management got carried away in stocking up on rattan furniture in 
anticipation of a big spring selling season. Rattan, at that time, was con- 
sidered a spring and summer merchandise item. As it turned out, sales 
failed to match expectations, and when the spring selling season came 
to an end, Bartlett found himself with a big inventory of rattan furni- 
ture. He also had a note of around $200,000 coming due at the bank 
which he was going to be unable to meet. So he and Amthor went to 
see their banker. 

"We want to carry over our loan," they asked. 



101 



102 "LUTHER, I DON'T UNDERSTAND THIS BUSINESS" 

on schedule and for you to continue to be in a seasonal operation, as 
you have in the past." 

Bartlett contacted his customers and offered them a 25 percent dis- 
count to buy the rattan furniture. Much to his dismay, his customers 
turned him down. 

"We don't need any more rattan," they informed him. "We've al- 
ready bought all we need to carry us through to next year." 

Bartlett was between the proverbial rock and the hard place. He need- 
ed to liquidate his inventory in order to pay off the bank, and he didn't 
know how to go about doing it. He mulled over the problem and finally 
approached Amthor with a last-ditch idea. 

"Let's have a sale," he suggested. "If we can't sell it to our retail cus- 
tomers, let's by-pass them and see if we can sell the stuff directly to the 
public." 

By now, Amthor was willing to try anything. He gave Bartlett his 
blessing. Bartlett rented an old warehouse on Taylor Street between the 
end of the cable car route and Fisherman's Wharf. He moved his sur- 
plus rattan furniture inventory into it, cut the prices from the regular re- 
tail price (they were still above his cost), and ran ads in the San 
Francisco newspapers, "Big Bargain, Rattan Furniture." 

To Bartlett' s and Amthor' s amazement, the public descended on the 
warehouse and took all of the furniture away. In two weeks, they had 
solved their inventory problem. 

Now Bartlett and Amthor saw an opportunity. The public seemed to 
like this kind of merchandising. Why deal with a middle man when 
they could deal directly with the consumer? In the early fall of 1958, 
they went around to each of their regular customers in the Bay Area 
and picked up their odd lots of furniture and other merchandise at bar- 
gain prices. They installed the entire haul in their store near Fisher- 
man's Wharf and again advertised "Big Bargains" in the San Francisco 
dailies. Again, the customers came in droves. By the end of the Christ- 
mas seiiiiiK season, mey were cown io oarc wans oiivc iuuic. 

Bartlett came to the conclusion that there was a market for a lot more 
imported merchandise than he had ever dreamed existed. So, he began 
sending buyers to the Far East to acquire larger quantities of furniture, 
decorator furnishings, housewares, even gourmet foods, and bring them 



"LUTHER, I DON'T UNDERSTAND THIS BUSINESS" 103 

in for sale in the converted warehouse. The enterprise, now a wholly re- 
tail operation, needed only one more thing to make the transformation 
complete, a new name; so, in 1959, Cost Plus Imports, Inc., was born. 

For the next three years the business prospered and grew, and the 
Cost Plus Imports store near Fisherman's Wharf became a San Fran- 
cisco shopping landmark. But by 1962, it had outgrown the ability of 
Jack Amthor to finance its continued growth. Complicating matters fur- 
ther was the fact that El Salvador, the source of Amthor' s funds, was 
going through another of its recurring revolutions. So Amthor was un- 
able to get any money out of the country at a time when Cost Plus bad- 
ly needed a fresh infusion of working capital. Amthor couldn't go to his 
banker because the company had already used up its line of credit. 
There was only one way to go, Amthor decided. Go public. 

He began making the rounds of Bay Area brokerage firms, and final- 
ly struck a deal with a San Francisco house to take Cost Plus public. 
Under the agreement, the broker promised to sell $300,000 worth of 
newly-issued Cost Plus stock on a "best efforts" basis. Amthor, being 
relatively naive financially, didn't realize that this was just a promise to 
try to sell the stock and that there was no guarantee the offering would 
be successful. He did a rather rash thing. As soon as the underwriting 
agreement was signed, Amthor permitted Bartlett to begin spending the 
anticipated proceeds in the Orient stocking up for the upcoming Christ- 
mas season. The reason for the hurry was to accommodate the long lead 
time between ordering and delivery of merchandise. Neither Amthor 
nor Bartlett wanted to be caught short. 

The stock offering was set for the spring of 1962. Unfortunately, the 
stock market took a tumble just as the Cost Plus offering hit the street. 
Despite his "best efforts," the broker could not move the stock; the of- 
fering was withdrawn during the summer. Amthor and Bartlett were re- 
ally behind a financial eight ball. They had all this merchandise on 
order, which was supposed to be shipped in September so that it could 
arrive in San Francisco in time for the Christmas selling season. They 
were obligated to pay for the merchandise when it hit port. Under nor- 
mal operations, an importer signs a 90-day note with his bank to fi- 
nance the shipment. The bank advances the money and the overseas 
supplier gets paid. Unfortunately, Cost Plus had already used up all of 
its bank credit. 



104 "LUTHER, I DON'T UNDERSTAND THIS BUSINESS" 

Fo^ii^ateh' Luther Henderson entered the picture. 

"Back in Fort Worth," he related, "we had seen copies of the Cost 
Plus 'Red Herring' prospectus offering this stock for sale. It was im- 
possible for us to visualize what kind of business this was. It sounded 
crazy and we didn't know much about it. But in August 1962, Charles 
and Gwen were going to San Francisco on a vacation, primarily be- 
cause Gwen used to live there. Charles didn't have much to do in San 
Francisco, businesswise. We didn't have much Tandy Leather business 
out there. And I knew he didn't like to go on strictly social vacations." 

So Henderson gave Tandy a copy of the Cost Plus prospectus and 
said, "Charles, since you're going to be out in San Francisco, why don't 
you go call on these people?" 

That's exactly what Tandy did. When he walked into the 15,000- 
square foot store, huge by Tandy Leather Company standards, his 
mouth fell open. He saw all this merchandise on the shelves and filling 
the interior of the store, but what impressed him the most was that there 
were seven cash registers and long lines of customers at each one. He 
watched the scene with increasing interest, as the lines of eager buyers 
never seemed to diminish. 

Tandy then proceeded upstairs to the second floor, where the Cost 
Plus offices were located, and introduced himself. He was, of course, 
warmly received. As Henderson put it, "Here was this big, rich Texan 
with his big cigar. They were immediately interested in getting ac- 
quainted and talking seriously." 

That night, as Henderson was enjoying dinner, the phone rang. It was 
Tandy calling from San Francisco. "Luther," he boomed, "get out here 
right away. This is the damnedest thing I've ever seen. I want some- 
body else's eyes to look at it." 

Henderson flew to San Francisco the next day, arriving in the late af- 
ternoon. He and Tandy immediately headed for Fisherman's Wharf. For 
Henderson, it was love at first sight. 

"I fell in love with the business then and there, 55 he reported. "The 
rncrciiariU-isc vvtis vciy sinnim iu inci. i o iuuciy, uui <x uiuw viuuvi, wiui 
a lot less finesse than we later developed. But they had a big store. 
What's so remarkable about this is that in renting this old building in 
San Francisco, they had stumbled into the very best location in the 
United States for this kind of store. They were doing $7 million or $8 



"LUTHER, I DON'T UNDERSTAND THIS BUSINESS" 105 

million of volume out of this one store. I think the biggest Tandy 
Leather company store at that time might have hit $200,000. 

"It was just the perfect location and continues to be. You've got San 
Francisco as a magnet for tourists. They love to ride the cable car and 
there are thousands of people walking by your front door every day. 
And every day there's a new group of people going by. The Cost Plus 
people were smart enough to recognize what a great location they had, 
so they began to buy up and lease adjacent property. Soon they had a 
full city block and, undoubtedly, the biggest volume store in its field in 
the country." 

With Tandy and Henderson entranced over the prospect, and the Cost 
Plus principals anxious to make a deal that would get them off the hook 
with their suppliers, serious discussions got under way that same 
evening. To Tandy, Cost Plus represented a retailing concept that ap- 
peared to dovetail beautifully with his newly-opened Tandy Marts. An- 
other incentive was the fact that it would take only a small amount of 
cash to bail Cost Plus out of its financial bind. The deal that was even- 
tually hammered out gave both entities what they were seeking. 

"What we did," Henderson reported, "was loan them the $300,000 
that they expected to get from the public offering of their stock. In re- 
turn, we got stock options to buy three-eighths of their company at its 
then book value." 

The agreement, which was completed in September of 1962, provid- 
ed for the issuance of transferable warrants to Tandy Corporation for 
the purchase of 150,000 shares of Cost Plus, Inc., common stock at $2 
per share, exercisable to February 1, 1968. This gave Tandy a period of 
more than five years to decide whether or not to exercise the option. 
The agreement also granted Tandy Corporation the right to establish its 
own national chain of Tandy-owned Cost Plus stores across the United 
States, operating them under the Cost Plus name. 

"They didn't have the capital to open new stores," Henderson pointed 
out. "We did. So we got the right to open up additional import stores, 
for which they would supply the merchandise at cost, plus a 7 percent 
handling charge." 

Tandy quickly opened three Cost Plus stores in California and Texas. 
The first one was opened in San Mateo, California, down the peninsula 
from San Francisco, before the ink was hardly dry on the agreement, 



106 "LUTHER, I DON'T UNDERSTAND THIS BUSINESS" 

and the two others were opened in the Tandy Marts in Fort Worth and 
Dallas just before Thanksgiving Day in time for the Christmas shop- 
ping season. 

"The people in San Francisco thought we were crazy when we told 
them we were going to open the stores in Dallas and Fort Worth," 
Henderson chuckled. "They said, The people down in Texas aren't go- 
ing to appreciate this merchandise.'" 

In opening the new stores, Tandy was not only getting a quick start 
on building a new chain store system to augment the ones it already 
had in operation, it was also relieving Cost Plus of the excess inventory 
it had acquired and couldn't digest. 

"So we were a big help to them," Henderson said. He recalled the 
day the San Mateo store opened in the fall of 1962. "Total sales were 
around $3,000, while a good day in a Tandy Leather Company store at 
the time was $400 to $500. Charles' mouth really fell open when he re- 
alized the amount of volume we'd gotten out of this first store." 

During 1963, stores were opened in Richmond, San Leandro and San 
Jose, California, and in San Antonio and Houston, bringing the number 
of Tandy-owned Cost Plus retail outlets to eight and adding about $1.5 
million to the company's sales volume. The agreement seemed to be 
working and all signs pointed to an eventual formal marriage between 
the two entities. But before the two lovers marched to the altar, they 
discovered that their relationship was not as idyllic as it had originally 
seemed. 

"We found out fairly quickly," Henderson said, "that the Cost Plus 
buying techniques were suitable only for their one big store that could 
sell almost anything because it had such tremendous traffic. But the lit- 
tle stores that we were opening didn't have that kind of traffic. So 
things that they were successful with, we wouldn't be. They also didn't 
have to pay too much attention to quantity, because, again, they had 
such a fast turnover in their store at Fisherman's Wharf. They could di- 
gest stuff that, for us, was indigestible. So it was not a completely satis- 



iaviv/i 1 



In 1964, the Tandy group opened its tirst stores in the rapioiy- 
growing Los Angeles market and increased the number of outlets in 
Texas, but it was now apparent to Henderson and Tandy that a divorce 
from Cost Plus was inevitable. Their solution was to sever the connec- 
tion and go it alone. 



"LUTHER, I DON'T UNDERSTAND THIS BUSINESS" 107 

"We decided our best bet was to make our operation independent," 
Henderson explained, "so at the beginning of 1965, we gave them no- 
tice. We had to give them 12 months' notice under our agreement, but 
now we began to do our own buying, purchasing directly from foreign 
sources. We also had to change the name, and that's when we came up 
with Pier 1 Imports." 

Over the next year, Pier 1 , with Henderson as general manager, more 
than doubled its sales. It was now importing and retailing a worldwide 
selection of household items, decorator novelties and furniture at low 
prices made possible by direct purchasing from foreign sources. A new 
store that had been opened in Phoenix in August 1965 had brought the 
number of outlets in the Pier 1 chain to 15, all located on the Pacific 
Coast and in the Southwest. 

But problems persisted. 

"Pier 1 was a business that was anxious to expand, but was a cash- 
eater," Henderson explained. "It was consuming cash because it wasn't 
making any money. It had great potential, of course. Another problem 
was that we were experiencing difficulties at Pier 1 trying to duplicate 
the management style, techniques and controls utilized so successfully 
in the leathercrafts business by Charles Tandy. In the import store busi- 
ness, those techniques and controls were only about 75 percent effec- 
tive. The other 25 percent didn't work because the business was just 
different, primarily due to the long lead times. We had to buy merchan- 
dise so far ahead." 

The situation came to a head in 1965 with an inventory surplus crisis, 
for which Tandy blamed Henderson. Henderson, in turn, held Tandy 
equally culpable. 

"Charles, in those days, was not given to a lot of advance planning," 
Henderson contended. "I'm not demeaning him, but that's simply the 
way it was. So I couldn't go to him at the start of the year and say, 
'Charles, we would like to open up three stores, four stores or six stores 
this year.' I knew that we could open up some stores. I didn't know 
where we could open them because it depended on finding satisfactory 
locations, and they were very hard to find for import stores which need 
a lot of cheap space. 

"So I misread Charles' mind, if you want to call it that, or his plans. 
Anyway, I bought too much merchandise for Pier 1 in 1965. Now we 
were faced with a similar situation that Cost Plus had had in 1962; that 



108 "LUTHER, I DON'T UNDERSTAND THIS BUSINESS" 

is, we had a lot of stuff coming in and we didn't have enough outlets to 
turn it. We could see a glut coming." 

In anticipation of the oversupply, Henderson had cut off all buying by 
June. Tandy, however, did not become fully aware of the seriousness of 
the problem until August. By then, the rapidly-growing inventory was 
totally out of line with sales expectations. A furious Tandy called 
Henderson on the carpet. 

"Charles really chewed me out about it," Henderson recalled. "It was 
my fault and I didn't deny it. But that sort of disillusioned him about 
the import store business." 

For his part, Henderson was not unduly concerned about the exces- 
sive inventory. He felt that what he had ordered was good merchandise. 
"We had just bought too much of it," he acknowledged, "and we were 
just going to own part of it, more than we needed, for quite a bit longer 
than we liked." He tried to explain this to an obdurate Tandy. 

"I know we can clean this up," Henderson avowed. 

Tandy remained unconvinced. 

"We're gonna have to get rid of it," he snapped. "We're gonna have a 
giant liquidation sale." 

Tandy now gave Henderson a direct order: "I want you to take out 
full page ads in the newspapers in all of the cities where you have 
stores, and I want you to throw the cost book away. Forget what you 
paid for the stuff. I want you to price it to sell." 

Henderson took him at his word. 

"I remember one item we had at the time," he recounted. "It was a 
simple rattan chair. We'd paid about $2.25 for this chair. We customari- 
ly sold it for $3.49 and we would occasionally 'special' it for $2.99. 
We had a lot of these chairs. Charles had said, T want you to get rid of 
them.' So we priced them at $1.99 at the liquidation sale. 

"This was November of 1965," Henderson continued. "The sale was 
a total flop. We got about a 20 percent to 25 percent increase in sales 
volume. That's ail we got out of it. And the reason it flopped, it's sim- 

what a bargain it was being ottered. We were literally giving me stun 
away, but the public didn't realize it. It also could be that they feared 
the merchandise couldn't be any good because it was priced so cheap." 
At any rate, in Henderson's opinion, the liquidation sale fiasco "sort 
of completed Charles' disillusionment with the import store business." 



"LUTHER, I DON'T UNDERSTAND THIS BUSINESS" 109 

Coupled with that, Henderson asserted, was the fact that Tandy "was 
facing the considerable capital restraints of having the Tandy Leather 
Company laying golden eggs while its two hungry pups, Pier 1 and 
Radio Shack, which he had acquired by then, were eating them up. 
Charles recognized that he had these two vehicles, each of which could 
suck up a lot of money." 

Tandy engaged in a protracted period of soul-searching. Then he 
summoned Henderson to his office. Tandy's desk, Henderson noted as 
he entered the room, was covered as usual with sales reports from 
around the country. Tandy, however, seemed unusually subdued. He 
was about to admit defeat, and he didn't relish the experience. 

"Luther," Tandy said, "I don't understand this business. I've decided 
to get rid of these import stores, and I'm going to give you the first 
chance to buy them. I'll sell them to you at book value." 

Recalling the moment, Henderson said: "I kind of gulped because, of 
course, I knew we had almost broken even in the prior fiscal year. I 
knew we were going to lose money in the fiscal year we were currently 
in because of the huge gross profit kick that we had had to take follow- 
ing the liquidation sale that Charles had ordered. But the more I thought 
about it, the more I liked it. So I approached the other people who were 
working with me in the import store division. Most of them, of course, 
were transfers from the Tandy Leather Company, and they all seemed 
willing to go along." 

Henderson and his associates now pooled their resources. 

"We needed to raise $1,8 million to buy Pier 1," Henderson reported. 
"We raised $500,000 among ourselves, which was to be the capital 
stock of the new company. We were going to get another $500,000 
from the Federal Small Business Investment Corporation and borrow 
$800,000 from the Fort Worth National Bank secured by my personal 
guarantee. That's how we were going to finance it." 

Henderson and Tandy shook hands on the deal in December of 1965 
and were shooting for a closing by the end of January 1966, when a 
complication developed. 

"As we got closer to completing the deal, the SBIC began to put the 
squeeze on us on the terms for lending us the half-million dollars they 
had promised to lend us back in November," Henderson said. "They 
kept raising the ante and the terms got more and more onerous. It final- 
ly got to the point where they were getting themselves into a preferred 



110 "LUTHER, I DON'T UNDERSTAND THIS BUSINESS" 

position. If the venture was successful, they would have control of it. If 
it was unsuccessful, they would get paid off ahead of everybody else." 

Henderson went to Tandy with his problem. 

"I'm sorry, but I can't proceed with the deal," he informed Tandy. 
"The terms that the SBIC wants are unreasonable." 

Tandy nodded his head in agreement as Henderson outlined the de- 
tails of the SBIC terms. 

"I guess this means we're just going to have to kill the deal," Hender- 
son said ruefully. 

Tandy looked at his long-time friend and associate through a cloud of 
cigar smoke. 

"Let me think about it," he said. 

The next day Tandy summoned Henderson to his office. He had fig- 
ured out a way to raise the $500,000 that Henderson needed and, at the 
same time, remove the SBIC from the picture. 

"I'll make this deal with you," he told Henderson. "Tandy Corpora- 
tion will take $500,000 worth of Pier 1 preferred stock, which, with 
the $500,000 you've already raised from your own group, will provide 
the $1 million of equity you need in order to get the $800,000 bank 
loan." 

Then Tandy quickly added two provisos. 

"I want your handshake that you will retire this preferred stock as 
quickly as you can. And I want the preferred stock to be convertible. I 
want it to be convertible on a scale where I receive more stock the 
longer you wait to pay me off." 

Recalling that moment, Henderson said feelingly, "This preferred 
stock could not be redeemable on its face or the bank wouldn't have 
loaned us the money. So Charles and I had nothing but a handshake 
agreement that I would endeavor to pay him off as quickly as we could. 
It was a very nice gesture on his part. He could afford to do it, of 
course. Tandy Corporation had plenty of money, but Charles had better 

U&eS 1U1 it man lOcmiug it tu a cunipaiiy tuat vvao juot gvmg uctt kjli ito 

own. I always appreciated that, because without that bit of financing T 

uoubi if wc cuuxu ndvo uiduc Iiio ucai. 

The agreement that Henderson and Tandy finally shook hands on, af- 
ter some additional dickering back and forth, stipulated that Tandy Cor- 
poration would receive 10 shares of Pier 1 common stock for each share 
of preferred stock it held, if the preferred stock were converted immedi- 



"LUTHER, I DON'T UNDERSTAND THIS BUSINESS" HI 

ately. Tandy would receive 20 shares of common stock if the conver- 
sion took place within a year, and 50 shares if the preferred stock was 
converted after one year. 

So the deal was struck. The Fort Worth National Bank loaned Hen- 
derson the $800,000. He now had the $1.8 million he needed to take 
Pier 1 off Tandy's hands. The sale was completed on February 10, 
1966. Henderson resigned as vice president and treasurer of Tandy Cor- 
poration to become the president and chief executive officer of Pier 1 
Imports, Inc. 

"Now we got real busy," he confided. "We were very strongly moti- 
vated. We cleaned the business up. We got rid of the excess inventory. 
We paid off the bank before the next year was up. I adopted a short fis- 
cal year. You see, we completed the deal in February. So I adopted a 
March 3 1 fiscal year for the company, so that I could get that loss be- 
hind us, and that was the last time the business lost money. We bought 
back all of the preferred stock from Tandy in less than three years." 

Tandy was delighted when the final shares of preferred stock were 
converted, Henderson said. "And, of course, for the next umpteen years 
after that his standard query every time we saw each other was, 'Why 
didn't you bastards do this good a job of running the company when 
you worked for me?' I never could tell him, but what I really wanted to 
say to him was, 'Because you wouldn't leave us alone,' which was the 
real answer." 

Henderson took Pier 1 public in 1969 and then sold it to Fuqua In- 
dustries for $35 million in December 1979, receiving a management 
contract and a large stock option as part of the deal He continued to 
serve as Pier 1 president and CEO until his retirement in 1983. By then 
Pier 1 was owned by Intermark Corp., which had bought a controlling 
interest in Fuqua Industries the year before. 

"After I bought Pier 1, Charles and I continued to see each other 
quite frequently," Henderson recalled, "and I asked him to join our 
board. He was always a very active board member. He was really good. 
He always had lots of ideas. Frequently he would not agree with the 
policy that I thought was right for the company, and we'd talk about it 
at the board meetings. He'd express his reservations, and when you 
hold a discussion like that before a group of intelligent people, it fre- 
quently causes you to modify your course of action. But he would nev- 
er vote against it if that's what I wanted to do." 



112 "LUTHER, I DON'T UNDERSTAND THIS BUSINESS" 

The Pier 1 board meetings were held in Henderson's office on the 
third floor of the building which served as the company headquarters. 
There was no elevator, which caused a problem after Tandy suffered a 
heart attack in October of 1968. 

"After Charles had his heart attack, we fixed up a conference room 
down on the first floor because he couldn't climb those two flights of 
stairs, and we didn't want him to," Henderson said. "We were always 
very close," he added, "and he used to tell me, and I think he meant it, 
that I was a lot more like a brother to him than his brother Bill was. He 
and Bill didn't get along too well. They kind of sparked. I remember 
that Bill was very skittish about getting into bed with Charles in 1955 
on the American Hide & Leather deal. His attitude was, 'I may get a lot 
of money out of this but I don't want to work for you.' Charles didn't 
want him to work for the company, either. Bill had some good stores, 
but he wasn't in Charles' league as far as business acumen, drive and 
determination are concerned." 

Charles was "undoubtedly" a genius in motivation and a genius in 
merchandising, Henderson said of his old friend and mentor, but he had 
some weaknesses, too. 

"He didn't take the time to realize that there were subtle differences 
between the kind of retail chain that Pier 1 was and the kind he was 
used to running/' Henderson opined. "If he'd given us a little more 
room, we'd have probably remained with him. We could have been a 
very successful division of Tandy Corporation." 



Chapter 8 

A Bargain Basement Buy 

in Boston 



Even before the initial deal was struck with Cost Plus Imports in 
1962, Charles Tandy had become interested in electronics as a possible 
avenue for enhancing the growth of Tandy Corporation. In the early 
1960s, he had made a pass at Lafayette Electronics of New York City, 
then the largest operator of electronics stores in the country. 

"We were completely rebuffed," Luther Henderson said of the effort. 
"Lafayette had about 25 stores at the time, and here was this little up- 
start wanting to buy them." 

Tandy approached Allied Electronics in Chicago and again received 
the cold shoulder treatment. The second turndown caused him to con- 
clude that if he wanted to get into the consumer electronics business, he 
would have to do it on his own. The opening of the Tandy Mart in Fort 
Worth in December of 1961 provided him with the vehicle he was 
seeking. Tandy convinced Charles C. Gumm, the owner of a small 
electronics retail business on Fort Worth's east side, to open an elec- 
tronics crafts store in the Tandy Mart. Two months later, Tandy bought 
the store from Gumm and shortly thereafter opened similar stores in 
Dallas and Houston under the Electronics Crafts name. 

"The stores sold electronics supplies very close in nature to what the 
old Radio Shack stores sold," Luther Henderson said. "The Electronics 
Crafts stores were not failures exactly, but neither were they very suc- 
cessful. Charles, however, continued to have an interest in this field be- 
cause he saw the potential in it." 

Bill Michero observed, "I don't think Charles would have had any 
interest in Radio Shack if it hadn't been for our entry into the do-it- 
yourself electronics business by buying out Charley Gumm. This gave 
him a year or more of fumbling with it and deciding he liked it." 



113 



114 A BARGAIN BASEMENT BUY IN BOSTON 

The stores sold electronics kits, wire, alligator clips, soldering equip- 
ment, and doodads, which Michero referred to as "electronics find- 
ings/' a nostalgic reference to the old Hinckley-Tandy "shoe findings" 
days. 

"We were marching to the wrong drummer entirely in our initial ef- 
forts with those 'electronics findings' stores," Michero stated, "but that 
was the precursor of our interest in the electronics business." 

While Tandy was getting his feet wet in the consumer electronics 
business in Texas, a series of events was transpiring in Boston involv- 
ing his old banker friend, Bill Brown. More than a quarter-of-a-century 
later, Brown, who retired as chairman of the board of the First National 
Bank of Boston in 1989, recalled the circumstances that led to Tandy's 
return to Beantown in search of another deal. 

"In the fall of 1962," Brown began, "I was a vice president in the 
Commercial Loan Department of the bank when I received a call from 
John Toulman, the First National's senior lending officer, asking me to 
come to his office. When I got there, he handed me a manila folder 
containing a thick file. T want you to take over this account,' Toulman 
said. c We're in real trouble on this one. We've got a big loan that's 
gone sour. We've had to cut off their credit. I want you to see what you 
can do with it'" 

The company Toulman was talking about was Radio Shack. 

It had been founded in 1921 by Theodore Deutschmann as a one- 
store retail and mail order firm selling radio and electronic components 
to ham radio operators and electronics buffs. Deutschmann, who had 
emigrated from London to Boston with his parents in 1890 at the age of 
3, had gotten interested in radio after serving as a foreign representative 
for several German telephone groups. The budding enterprise was giv- 
en its name by William Halligan, a former amateur radio operator 
and an early employee of Deutschmann's, who later founded the Halli- 
crafter Corporation. 

The name Radio Shack was derived from maritime lore dating back 
f^ Tv. f /i^ rr4r v^i 'r, ^xr^-Mi-f-s^-M r\f fUp rrir\\r\ of fVio fijvD of th?* oentnrv when the 

wireless equipment installed anoara snips piying me Seven Seas was 
housed in a wooden structure above the bridge that was called the "ra- 
dio shack." The ship's radio operator was an officer who was called 
"Sparks." Halligan convinced Deutschmann that Radio Shack was an 



A BARGAIN BASEMENT BUY IN BOSTON 115 

appropriate name for a venture whose initial customers were primarily 
"Sparks" and "radio hams." 

The first Radio Shack store was located on Brattle Street in down- 
town Boston only a block away from the scene of the Boston Massacre 
and adjacent to the Brattle Tavern, where General George Washington 
held meetings with his staff during the Revolutionary War. By the end 
of 1962, the enterprise had grown to nine retail stores and a mail order 
business offering electronics products from around the world, with an- 
nual sales of about $14 million. The stores were located in Boston, 
Braintree and Saugus, Massachusetts; Stamford, West Hartford and 
New Haven, Connecticut; Cranston, Rhode Island; and Syracuse, New 
York. 

In the late 1920s, the small company had taken a brief fling at mar- 
keting completed radios, and by the late 1940s had become a leading 
distributor of electronic parts and equipment to do-it-yourselfers and to 
industry. It had issued its first catalog in the early 1940s. In 1947, it 
moved somewhat away from its traditional field of regular electronics 
into the then new field of high-fidelity components and had opened 
what it called "the nation's first Audio Comparator Showroom." The 
distinctive feature of the Audio Comparator was a switching console 
that provided immediate "aural" comparisons between speakers, ampli- 
fiers, turntables and cartridges. 

The company had begun marketing its early products under the 
"Realistic" private label in 1954. Its first products were an FM tuner re- 
tailing at $39.95, an AM tuner at $29.95, and a matching 10-watt am- 
plifier with built-in preamplifier at $29.95. A 1956 issue of High 
Fidelity magazine reported it had tested the Realistic FM tuner and had 
found it to have "sensitivity surprisingly close to that of tuners which 
sell for three or four times its cost." Radio Shack had begun importing 
merchandise from Japan in the mid-1950s, and in 1961 had opened an 
engineering office in Tokyo. 

In 1961, the company which was now headed by Milton Deut- 
schmann, brother of the founder, reported a net loss before income tax- 
es of $836,358 on net sales of $16,711,833, after having realized a net 
profit of $445,804 on sales of $12,583,546 in the previous year. Milton 
Deutschmann attributed the loss to "severe operating difficulties as a 
result of the expansion of our main plant" and to "additional costs in 



116 A BARGAIN BASEMENT BUY IN BOSTON 

omcr pnases 01 oui cApansiun piogiaiu. ah u^ cujjuuch x^puit,, i/uui- 
schmann listed several '"major achievements" during the year, one of 
which was the "successful" introduction of revolving credit. 

As it turned out, Deutschmann would later acknowledge in a tele- 
phone interview from his home in Wellesley, Massachusetts, the intro- 
duction of revolving credit proved to be a major factor in Radio 
Shack's financial collapse. 

"Our experiment with extension of credit got us into trouble/' Deut- 
schmann said candidly. "We knew how to merchandise, but we didn't 
know anything about credit. It was a perfect plan on paper, but the 
execution was pitiful. We simply didn't know how to collect our 
money." 

By the time Bill Brown was called into John Toulman's office and 
given the assignment of finding a buyer for Radio Shack, the company 
was losing $200,000 a month. And, in addition to its $5 million note at 
the First National Bank of Boston, it also owed $2 million to State Mu- 
tual Life Insurance Company of Worcester, Massachusetts. 

Toulman didn't have to emphasize to Brown the problem the bank 
faced with the imminent Radio Shack default. u In those days, in the 
early 1960s," Brown explained, "the bank didn't take losses. Write-offs 
hadn't started yet at our bank and at all other banks. So this would have 
been a disaster. And we were looking at a situation where the bank 
would probably lose 75 cents on the dollar if we liquidated Radio 
Shack because most of its assets were inventory — and inventory 
doesn't go through a fire sale very well." 

It was a grim Brown who returned to his office after his session with 
Toulman to begin pondering his options. Brown, fortunately, was some- 
what familiar with Radio Shack because one of his former classmates at 
the Harvard Business School, Tim Quillan, had been Milton Deut- 
schmann' s number two man at one time. Now he took out a yellow pad 
and began making a list of possible buyers. 

S„ »~ 1 -- . ~±~^A.~r%1 s^r.+^AZArs-t-r^ci * ■*-*-* +-v* a. A * r\ -i- £> 1 \ / ^nma i~r\ T2 **r\YK /■»■•»' c tumrl in. 
CVCiai pUtdllKU Otmuiuaix-S liiuiiwuiatuiy uamv tu ±jh\j\Vxi o mmu, xxx 

eluding Allied Radio in Chicago and Lafayette Electronics in New 
York City. Brown got un ilie pixuiic tu scl up appointments Lw niCCi wViu 
the heads of the prospects on his list. No one was interested in taking 
over an almost defunct, debt-encumbered operation. In addition, after 
talking with the Allied Radio people in Chicago, Brown became con- 
vinced they were in the same precarious condition as Radio Shack, but 
didn't know it. 



A BARGAIN BASEMENT BUY IN BOSTON 117 

"Now I was really worried about what the hell I was going to do," he 
said. "I kept thinking about it, because this was my big chance to im- 
press the big boss. Finally, I thought of Charlie Tandy." 

Brown knew that Tandy was interested in getting into the electronics 
business. They had talked about it after Tandy had gained control of 
General American Industries. 

"Charles knew he had to get into some other lines of business, and 
Radio Shack was right down his alley," Brown recollected. "So I had 
suggested then that he talk to Milton Deutschmann. They talked. But 
nothing came out of that conversation. So I was reluctant to call Tandy 
again on the same deal." 

Brown sat around for a couple of days agonizing over his predica- 
ment. He knew Toulman would be calling him to ask for an update on 
the Radio Shack situation. Finally, seeing no other alternative, he put in 
a call to Tandy in Fort Worth, only to learn that Charles and Gwen had 
just left on a trip to Mexico and were not expected back for at least a 
week. 

"I thought it over," Brown continued, "and the next day I called 
Charles' office again and asked if they would give me a number where 
he could be reached. They said they couldn't do that. So I told them it 
was extremely important and asked if they'd call Charles and tell him 
that I was trying to reach him. The next day he called me and asked 
what he could do for me. I said, 'You told me once you would like to 
own Radio Shack. Now's your chance.'" 

Tandy's response was, "Oh, no. No way." 

Brown persisted, "Why don't you come to Boston and talk about it?" 

"I don't want to waste my time." 

"Why would you be wasting your time?" 

"It's Deutschmann. It's impossible to make a deal with him. All he 
wants to talk about is how much money he's going to spend on adver- 
tising, and what he's going to do to expand the company." 

Brown's tone hardened. "It's different this time. The State Mutual 
Life Insurance Company in Worcester has a big loan to Radio Shack, 
and Dick Russom at State Mutual is my close personal friend. He and I 
have talked this over and we've agreed to work together to help you 
make a deal with Deutschmann." 

"All right," Tandy said, "I'll be there tomorrow." 

As soon as he hung up the phone, Brown dialed the office of Francis 
Hooks Burr, a senior partner in the Boston law firm of Ropes & Grey 



118 A BARGAIN BASEMENT BUY IN BOSTON 

and a director of Radio Shack. He had served as treasurer of Harvard 
University, board chairman of Massachusetts General Hospital, and as a 
director of American Airlines and a number of other major corpora- 
tions. How and why Burr ever became a member of the Radio Shack 
board was beyond Brown's knowledge. "Maybe," he guessed, "it was 
because one of the junior partners asked him to go on the board after it 
became a client. Anyway, he was on the board and he had a reputation 
to protect." 

When Brown got Burr on the line, he told him about Tandy's sched- 
uled visit to Boston the next day to talk about buying Radio Shack, and 
asked if the meeting could be held in Burr's office. 

"I'm going to need your help in getting Milton Deutschmann to at 
least meet with us and talk with us and find out what can be accom- 
plished," Brown informed Burr. Then he added, "Hooks, you're a direc- 
tor of Radio Shack and I don't think you want to be a director of a 
bankrupt company" 

Burr's reply was a brisk, "1*11 have Deutschmann in my office tomor- 
row morning at 9 o'clock." 

After talking to Brown, Tandy asked Jesse Upchurch's travel agency 
in Mexico City, Percival Tours, to make the arrangements for him to 
get to Boston that night and reserve him a room at the Ritz-Carlton Ho- 
tel. He and Gwen had been visiting the Upchurches at their home in the 
Mexican capital. Tandy was able to catch a flight that got him to Bos- 
ton in the early evening. 

Shortly before 9 o'clock the next morning, March 27, 1963, a cab 
picked Tandy up at the Ritz-Carlton and deposited him at the First Na- 
tional Bank Building, then located at 67 Milk Street in the financial dis- 
trict. He and Brown had a quick cup of coffee, then walked across the 
street to Burr's office about half a block away. 

"We walked into Burr's office about 9:30," Brown recalled. "Deut- 
schmann was already there. We sat down and I told them that, under 
the right circumstances, Charles would be interested in buying Radio 

the next two hours did most ot me taiicmg. 

"And Tandy was right," Brown continued. "Deutschmann didn't ac- 
cept the fact that Radio Shack was really in trouble. He sounded like 
everything was really golden, that they were just in a little over their 
heads, that all they had to do was spend some more money on advertis- 
ing, spend some money up front, and they could get this thing rolling 



A BARGAIN BASEMENT BUY IN BOSTON 119 

again. He said they had opened two huge stores, one in Hartford, Con- 
necticut, and the other in Braintree, Massachusetts, in the past two 
years and that this had impacted their earnings; but they were now posi- 
tioned to cash in on these and other capital outlays." 

Brown had seen Tandy fidgeting in his chair, pulling impatiently on 
his cigar and expelling clouds of smoke for the past hour. The meeting 
was not going the way he had planned. Then, at about 11:30, Tandy 
suddenly rose to his feet and, without saying a word, began walking to- 
wards the door. 

"Where are you going?" Brown demanded. 

"I'm going back to Mexico," Tandy said. 

"Just a minute," Brown said. "I'll go out with you," and he motioned 
to Burr to follow him. "Burr came to the outer office, where Charles 
and I were standing," Brown recollected. "I took him down the hall 
away from Tandy and I said, 'Hooks, you'd better talk to this guy.' 
Then I told him about all the work that I'd done and I said, 'There just 
isn't another buyer around.'" Brown paused in his narrative to offer an 
aside, "Things then weren't like they are today, where people will buy 
anything." 

At any rate, Burr got the message. "Let me talk to Deutschmann," he 
told Brown, "and you bring Tandy back here after lunch." 

Brown returned to the outer office and invited Tandy to join him for 
lunch. He escorted Tandy back across the street to 67 Milk Street, and 
the two went up to the tastefully-appointed First of Boston's dining 
room. It was a large open room, not yet crowded at that pre-noon hour. 
A captain escorted them to a table with a breathtaking view of the his- 
toric harbor where history's most famous tea party took place. 

After they were seated, Tandy told Brown, "I'm happy to have lunch 
with you, but I want you to know that I'm leaving immediately after- 
wards. I can catch a plane this afternoon that'll get me back to Mexico 
City tonight. My wife's still down there." 

"No, you're not," Brown responded. "You're going to make a deal 
with Deutschmann." 

"You can't make a deal with that guy," Tandy retorted. 

"Yes you can," Brown insisted. Then he looked at Tandy searchingly 
and asked, "What kind of a deal would you be willing to make?" 

Tandy began sputtering, as he tried to articulate what he had in mind, 
and Brown stopped him and said, "Just a minute," and handed Tandy a 
menu which was lying on the table. "The menu was thick like a card- 



120 A BARGAIN BASEMENT BUY IN BOSTON 

board and it served as both a menu arid a place mat." Brown remem- 
bered, "and I turned it over and I said, 'Write down your deal. What 5 11 
you do? What'U you pay? What are your terms?'" 

Tandy said, "All right, okay," and he pulled a pen from his inside 
coat pocket and began writing. Several minutes later he handed the 
menu back to Brown. 

"Basically," Brown said, "he wrote down three provisions for making 
the deal. The first was that he would take over management immediate- 
ly and with full authority. Second, he would hire one of the Big Eight 
auditing firms to conduct an audit. And third, he would pay book value 
as of June 30, 1963, the end of the Radio Shack fiscal year." 

Brown looked at Tandy's proposal and said, "Hell, you want the 
business for nothing, don't you?" 

"What do you mean?" Tandy replied innocently. 

"You know damn well what I mean," Brown shot back. "You know 
as well as I do that they're not going to have any net worth when you 
finish the audit." 

Tandy grinned and conceded, "Yeah, you're probably right." 

"Well," Brown stipulated, 'there's going to be a fourth provision if 
we're going to have an understanding. You're going to have to put 
some money in there that's at risk." 

"I'll put money in if it's needed," Tandy countered. 

"No," Brown was adamant, "that's not going to be the agreement. 
You're going to agree with me that you're going to put in at least half a 
million dollars." 

Brown chuckled softly as he recalled the scene in the swank dining 
room that was now beginning to fill up with bankers and their guests. 

"We did a little negotiating and settled at $300,000. So we had a ver- 
bal agreement that if he took over Radio Shack, he'd have $300,000 in 
the pot ahead of us," Brown said. "Then we went back down across the 
street." 

Tandy presented his terms to Deutschmann, who was now receptive. 

going to get a lot of money after the audit and get out of his problem at 
the same time," Brown said. "Deutschmann simply couldn't believe 
how broke his company really was. So they signed the deal." 

Brown had one final memory of that history-making meeting. 

"As we went back across the street, Charles said he was heading back 
to Texas and would be back very soon to take over Radio Shack, He 
said, Til see you,' and I said, 'Just a minute, where's your check?' 



A BARGAIN BASEMENT BUY IN BOSTON 121 

"Charlie said, 'What are you talking about?' And I said, T want a 
check for $300,000.' So he stood outside on the street and wrote out the 
check to Radio Shack for $300,000 and I took the check back to the 
bank with me." 

On March 28, 1963, a special meeting of the board of directors of 
Tandy Corporation was hastily convened at the company's main offices 
on West 7th Street in Fort Worth. A quorum was barely present repre- 
sented by Charles Tandy, John B. Collier, Jr., Luther Henderson and 
Jim West. Absent were the three other members of the seven-man 
board, Lawrence Dempsey, Alfred Hauser and Carl Welhausen. 

Tandy called the meeting to order and presented a description of the 
operations and financial condition of Radio Shack and a summary of 
the agreement he had struck with Deutschmann. The minutes of the 
meeting gave the following details: 

"A description was given of the proposed plan, under the terms of 
which Tandy Corporation would be granted options to acquire control- 
ling interest in Radio Shack Corporation and would be granted immedi- 
ate control and operating management of that company. There followed 
a lengthy discussion of the proposed plan, after which, upon motion by 
Mr. Henderson, seconded by Mr. Collier, and unanimously approved, it 
was resolved that the president be authorized to enter into an agreement 
with Radio Shack Corporation and with certain of its original stock- 
holders and take any action he deems necessary or desirable to imple- 
ment and carry out the intent of such agreements." 

The agreement granted Tandy Corporation an option to acquire 
237,687 shares of Radio Shack common stock from the company, plus 
an additional 355,881 common shares from the Deutschmann family, at 
a price equal to the per share book value of Radio Shack at June 30, 

1963, as determined by Price Waterhouse & Company. The option 
would expire June 30, 1964, but would be extended to December 31, 

1964, if Tandy had by June 30, 1964, purchased at least 49 percent of 
the shares offered by the Deutschmann family and had made a written 
offer to purchase the remaining shares. 

So, for the $300,000 advanced to Radio Shack, for which Tandy Cor- 
poration was granted a subordinated participation in the loan agreement 
with the First National Bank of Boston, plus the payment of $5,000 to 
secure the options, Charles Tandy now held in his hands the right to ac- 
quire, at book value, a 62 percent ownership of Radio Shack. 

"As Charles expected," Bill Brown said, "the Price Waterhouse audit 
came up with a very large negative net worth, which made the book 



122 A BARGAIN BASEMENT BUY IN BOSTON 

value zero. So, except for the $300,000, he took over Radio Shack for 
nothing. But there's no doubt that Radio Shack would have folded if 
Tandy hadn't stepped in." 

Luther Henderson added, "The Radio Shack management was very 
reluctant to give up control of the business. The bank, of course, had a 
lot of leverage. But for a total risk of only $300,000, Tandy got effec- 
tive working control of a business with around $14 million worth of 
sales volume and assets of between $8 million and $9 million. That's 
all Tandy had at risk. The company was not liable for anything but 
$300,000 if we didn't succeed in making it work." 

Tandy had his go-ahead, but it had been granted with considerable 
misgivings on the part of his board. The directors still held a healthy 
skepticism about the Radio Shack venture and they made it clear that 
they were reserving judgment on any additional commitments of com- 
pany resources. 

Jesse Upchurch believed that the board members' doubts stemmed to 
a great extent from their less-than-happy recollections of Charles' prior 
escapade with a company domiciled in Boston. 

"After the fiasco with American Hide & Leather, Jim West and some 
of the others simply didn't want anything to do with any of those East- 
ern companies," Upchurch said. 

He recalled how just a short time before the Radio Shack agreement 
was okayed, Tandy had brought another proposal before the board for 
its approval. 

"Charles had hammered out a deal with Hoffritz Cutlery, the people 
who have all these shops at all the airports, but the directors said, 'No 
way.' They didn't want to get into a deal with another Eastern 
company." 

Eunice West recalled the strong reservations Jim West had about get- 
ting involved with Radio Shack. 

"In the beginning, he tried to talk Charles out of it," she said. "Then, 
as time went by, he saw that this was a good thing after all." 

tormiciable cnalienge or turning Kactio snacK arouna ana defying me 
conventional wisdom of the time that there was no money to be made 
in consumer electronics. 

"If Charles Tandy had read the papers and listened to the analysts, he 
would never have gotten into consumer electronics," said John V. 



A BARGAIN BASEMENT BUY IN BOSTON 123 

Roach, who became chairman of Tandy Corporation in 1982. "But 
Tandy was looking at electronics as a retailer, rather than as an elec- 
tronics manufacturer. It was a case of one man seeing what no one else 
saw. The success of Radio Shack is a measure of Charles Tandy's 
genius as a merchant." 

Tandy later would say that the main thing that attracted him to Radio 
Shack was the fact that "it did have business, it did have a quantity of 
customers. The only problem was, it was spending more money than it 
was taking in. So all I had to do was change that." 

He didn't waste any time getting started. 

What Milton Moskowitz, a prominent business writer, later called 
"the most spectacular retail expansion under one name since the explo- 
sion of the A&P grocery chain in the early part of the century" was 
about to be launched. 



Chapter 9 
The Crusade is Launched 



Whenever he stayed in Boston, Charles Tandy favored the Ritz- 
Carlton Hotel So it was in a suite in that elegant hostelry that Tandy 
ensconced himself on Sunday night, March 31, 1963. 

Bright and early the next morning, Monday, April 1, found Tandy in 
Bill Brown's office at the First National Bank. He had a busy day 
ahead of him, including a meeting at the Ritz-Carlton that evening at 
which he was going to introduce himself to his new employees. 

Brown questioned his visitor right off the bat. 

"Who are you going to bring in to run Radio Shack?" 

"Nobody." 

Brown couldn't believe what he was hearing. 

"What do you mean, 'nobody?'" 

"I mean that I'm not going to get anybody. I'm going to run it 
myself." 

"You mean you're going to move up here to Boston?" 

"No," Tandy told Brown, "I'll come up here on weekends." 

Brown's stomach began to churn. He thought, "Oh, Jesus Christmas, 
with all of the problems Radio Shack has..." But it quickly became ob- 
vious that Tandy had been doing his homework. Brown began to feel 
better as Tandy outlined his program. 

"He knew exactly what he wanted to do with Radio Shack," Brown 
said. "First of all," Tandy told him, "I'm going to cut out all mail order. 
You can't sell these kinds of products by mail order. People will buy a 
recorder and pull the wires off and ship it back. I'm cutting out credit. 
So it's no mail order, no credit, all cash, and we're going to buy most of 
our merchandise in Japan." 

"What about having a lead line?" Brown wanted to know. 



125 



126 THE CRUSADE IS LAUNCHED 

Tandy answered, "I'll make my own." 

Tandy continued, "We're going to liquidate our big stores and we're 
going to open lots of small stores, little holes in the wall. I'm going to 
rent them. So, if one location doesn't work out, I'm not stuck for a hell 
of a lot. We're gonna open lots of locations. The customers are gonna 
come in. They're gonna look at the merchandise. They're gonna pay 
cash and they're gonna walk out. And a sale is a sale." 

Then Tandy added, "I'm gonna fire all the chiefs and promote the 
Indians." 

Among the Indians that Tandy was talking about promoting were 
Bernie Appel, Dave Beckerman, and Lew Kornfeld. 

A balding, heavy-set man with an infectious smile and an accent that 
is as Boston as a can of baked beans, Appel had joined Radio Shack as 
a $125-a-week buyer in August of 1959. He was named president of 
Radio Shack in 1984, but remained a buyer at heart, happiest when dis- 
covering and introducing a hot new product. A native Bostonian, Appel 
began working at the age of 10 throwing a newspaper route and deliver- 
ing groceries. "I never had a penny in my pocket," he recalled, "What- 
ever I made, I gave to my folks." 

After graduating from high school, Appel worked for a catalog dis- 
count house and attended Boston University at night, but he didn't get 
along with his boss. "We didn't agree on how the business should be 
run," Appel reminisced. "I believed we ought to do our thing with a 
fairly heavy push to profits. He believed in picking out every odd and 
end and trying to make every last sale, whether we made money on it 
or not." 

So in May of 1959, Appel went to the Snelling & Snelling employ- 
ment agency looking for a job and was referred to Radio Shack. He was 
interviewed by Lew Kornfeld in the Radio Shack offices then located at 
730 Commonwealth Avenue, across the street from Boston University. 
Radio Shack had opened its third store in downtown Boston on Com- 
monwealth Avenue the year before, in a three-story concrete building, 
in which a very successful Radio Shack store still operates. 

ami r* ., n ,1 .a a.\. _ __. J tt - -,. — ,~ ~r£Z~~„ n ~+A ^~* 

11115 lllOl I1UU1 WOLO tlJLU Oll/lC, tilt/ JVVUiiU x±wx »»viv viaivvu, whv* "» 

the basement was the mail order warehouse," Appel recalled. "Lew had 
an office on the second floor. He was then the vice president of 
advertising." 

Although his initial interview didn't result in a job offer, Appel was 
interested enough to begin dropping in on Kornfeld several times a 



THE CRUSADE IS LAUNCHED 127 

week after getting off work. Kornfeld seemed to enjoy chatting with the 
eager young job seeker. They would talk about the catalog business and 
merchandise. 

"Lew would hold up a wristwatch and ask me, 'What do you think 
this is worth?' And Fd tell him. Once he showed me a Schick shaver, 
one of their big promotional items at the time, and he said, 'What do 
you think of this electric razor?' 

"I was an honest, blunt kid, and I said, 'It's a piece of junk.' 

"But we've sold hundreds of them." 

"So now you've got a whole bunch of people who bought something 
cheap and maybe are mad at you," Appel retorted. 

"Right after that, Lew hired me as a buyer," Appel related. "He said 
they could always make a store manager out of me if I didn't pan out as 
a buyer. He hired me as a buyer of non-catalog merchandise — pots and 
pans and things like that." A staff memo from Kornfeld announcing 
Appel' s hiring said that he would be buying sporting goods, house- 
wares, toys and games, books, watches and clocks, and phonograph ac- 
cessories. Appel kept the memo in a file that he claimed contained every 
memo Kornfeld ever sent him over the years they worked together. 

Appel was still a buyer when Charles Tandy appeared on the scene. 

"I'll never forget the day I first heard about Charles Tandy," Appel 
related. "It was April 1, 1963, April Fool's Day, and we all got a call 
that afternoon saying that we had a meeting that night at the Ritz- 
Carlton. And we all went into one of the junior ballrooms of the hotel, 
and that's where we met Charles Tandy." 

Appel was in the new Hartford store unpacking cartons and barrels 
when the summons to the meeting at the Ritz-Carlton arrived. He had 
had no forewarning of what was about to happen. 

"Milton Deutschmann never told us the status of the business," he re- 
ported. "No one would tell us anything. No one knew what our sales 
were. The merchandising staff, the buyers, didn't know we were going 
broke. This was kept a big secret. We knew we had a new president, 
Norman Krim. We knew there were new people in management, but we 
never knew why. We knew we were a little slow paying our bills. It 
was a little of a screwball situation." 

Appel walked into the meeting room at the Ritz-Carlton that evening 
to find a group of some 30 or 40 Radio Shack people in the room. 

"Charles Tandy was there with CO. Buckalew of the Tandy Corpora- 
tion's accounting department," Appel related. "Buck was carrying a big 



128 THE CRUSADE IS LAUNCHED 

stack of P&Ls." This was AppePs introduction to the profit and loss 
statement, which he soon discovered was as merrant to Charles Tandy 
as the Bible is to a fundamentalist Baptist. 

Tandy came right to the point as he opened the meeting. 

"I'm Charles Tandy from Fort Worth, Texas " he told the assem- 
blage. "I now own Radio Shack." 

Tandy's message was upbeat, Appel said. "He told us that we were 
going to be in the basic electronics business, that we were strong in 
electronics. He told us he had talked to Allied and Lafayette. He had 
talked to everybody, and he thought there was a bright future in elec- 
tronics, that we would open a lot of stores." 

Then Tandy began asking questions about the profit and loss state- 
ments Buckalew was holding. 

"What happened in 'this and this' store?" 

"What was the gross margin?" 

"How much does the store manager make?" 

To each question, Buckalew flipped open a P&L and gave Tandy the 
answer. "I can never forget Buckalew standing there with the P&Ls, 
turning those pages," Appel said. 

Lewis F. Kornfeld attended the meeting that night in his capacity as 
Radio Shack's vice president of merchandising and advertising. Korn- 
feld joined Radio Shack in 1948 as advertising manager and later be- 
came president of Radio Shack and then executive vice president and 
vice chairman and director of Tandy Corporation. He retired in 1981, 
but continued as a member of the board of directors. 

Kornfeld, a trim, articulate man who has written books on advertising 
and marketing, first met Milton Deutschmann in 1947, when he was in- 
terviewed for a job. Kornfeld' s father was a stockbroker and Deut- 
schmann was one of his customers. 

"My father told me that Deutschmann was looking for an advertising 
manager, so I went to see him," Kornfeld recalled. "I probably would 
have gone to work for them in 1947, but I had my mind set on a salary 
of $5,000 a year. That was a lot of money then. I was fresh out of the 

the direct selling shoe business, the Coats Shoe Company. But I hadn't 
been there long enough to be meaningful and I was not making $5,000 
a year. I had in mind that specific number, and I was not going to settle 
for anything less. So Deutschmann didn't hire me." 



THE CRUSADE IS LAUNCHED 129 

A year later, Kornfeld walked into the Radio Shack store on Wash- 
ington Street in downtown Boston to buy a hi-fi system. "Radio Shack 
had only one store then," Kornfeld recalled. "On the corner was a 
sporting goods store called Ivar Johnson, world famous for shotguns 
and bicycles. That old store is history now. Radio Shack owned a 
five-story building, about 100-feet wide, with the store on the street 
level." 

While looking at hi-fi systems, Kornfeld discovered that Deut- 
schmann had not yet hired an advertising manager. They talked again 
and this time Deutschmann agreed to meet Kornfeld's $5,000 figure. In 
September of 1948, he went to work. 

"The first year I was there," Kornfeld recalled, "the sales of the com- 
pany were about $1 million. About a third of that was what we called 
industrial. It was selling via salesmen and telephone to commercial out- 
lets like Raytheon and General Electric. A small amount of the sales 
that year, about 10 or 15 percent, was mail order. The rest was retail at 
the one store, at 167 Washington Street." 

Kornfeld traced the onset of Radio Shack's financial difficulties back 
to 1958, when the company moved its headquarters from Washington 
Street to 730 Commonwealth Avenue. By that time, as the vice presi- 
dent for merchandising and advertising, he was in charge of all the 
buying. 

Shortly before the move, Deutschmann had retained the services of 
Cresap, McCormick and Padgett of Chicago, one of the nation's largest 
consulting firms. 

"The reason we hired them," Kornfeld said, "was that our biggest ri- 
val then, Allied Radio Corporation of Chicago, had hired them to engi- 
neer their move. So they came in with all of their prestige and 
experience and their list of high-powered customers, and they engi- 
neered our move and set up our new warehouse. Our old warehouse 
was on three upper stories and a basement on Washington Street, and 
it was a mess. So the move was okay in itself. But, if you're not careful 
with consultants, they will grab anything that's loose and they'll even 
loosen some stuff that isn't loose. They convinced the management 
that sales would skyrocket merely on the basis of all this 
improvement." 

By 1958, Kornfeld continued, Radio Shack had developed a fairly 
substantial mail order business. Now Cresap, McCormick and Padgett 



130 THE CRUSADE IS LAUNCHED 

recommended the doubling and quadrupling of all purchase orders. "It 
was a fantastically stupid move/ 3 Kornfeld contended. u We now were 
getting in two times to four times the number of, say, broadcast micro- 
phones, which we carried mostly in industrial And there's no way 
you're going to double or quadruple your sales on those. It was a hell 
of a mess. That was problem number one." 

Problem number two, Kornfeld felt, was a misunderstanding on the 
part of Deutschmann and his cohorts as to what their gross margin was. 

"For example," Kornfeld pointed out, "we estimated that we had a 
going-in gross margin of 40 percent. And, of course, we knew we had 
that. But after that, there is a need to break out your gross margin in 
terms of the actual sales of items. And if you're selling a lot of 
marked-down stuff, that is going to lower your gross margin. Going-in 
margin has to be reduced by all of the realities, whatever they are, be 
they markdowns, returns, etc. Additionally, you have to know your 
costs. It turned out in not very far hindsight, that our management did 
not understand the mechanics of gross margins. How much it cost to do 
business versus how many bucks you had in receipts. If you take the 
former from the latter, you either have a margin or you don't. And our 
maintained margin was probably on the order of 28 to 32 percent. But 
if management does its arithmetic on a 40 percent basis, it's heading for 
real trouble. In other words, they didn't know all their costs." 

Then there was the problem with mail order returns, a large problem 
that continued to grow larger as the volume grew. 

"In the 1930s, '40s and '50s," Kornfeld explained, "electronics tend- 
ed to be heavy and fragile. And when the mail order returns would 
come in, either because the customer didn't want the shipment and sent 
it back or it didn't work or because it was collected for nonpayment, 
the returned stock would usually arrive in poor shape and wind up in 
stacks. This meant that even if it arrived in reasonably good shape, it 
was going to be smashed in the interim. And we had quite a few acres 

Of returns in OUr warehouse nil nf which nf ronrqp rprhippri nnr m-noo 

margin." That was problem number three. 

inability to collect on its shipments. "You have to add all of their other 
problems to the fact that they didn't know how to get their money from 
the sales they made," Kornfeld agreed. "But their problems were a lot 
more complicated than not knowing how to make people pay their 
bills." 



THE CRUSADE IS LAUNCHED 131 

They also were grossly overstaffed, he claimed. 

"Cresap, McCormick and Padgett, the consultants, had put in a table 
of organization. They had all these boxes. But you don't fill them in 
until you have a need for the additional personnel. But Deutschmann 
and his people filled them in." 

Kornfeld gave his recollection of the historic April 1 meeting. 

"Actually, what happened, Charles had a little dinner for key employ- 
ees and Mr. Deutschmann at the Ritz-Carlton in a private dining room 
on the restaurant floor. I don't think there could have been more 
than 20 people there. I can't remember too much of what he said, but 
I do recall I was in a state of shock. Prior to that evening, it was already 
known to a few of us that we were going to be sold to Tandy. I al- 
ready had a few catalogs of Tandy Leather Company. There were 
two speeches that night. One by Milton Deutschmann of farewell and 
one by Charles of hello. I guess, like all new owners, he didn't threat- 
en to rattle the cages. But it was implicit that the cages would be 
rattled." 

David Beckerman, who was then reporting to Kornfeld as advertising 
manager, also was present at the Ritz-Carlton that night. Beckerman 
had joined Radio Shack as advertising manger in 1956 and later be- 
came senior vice president and general manager of the Eastern Division 
and then vice president of marketing services. He was hired after Lewis 
Kornfeld was promoted from advertising manager to vice president for 
merchandising and advertising. Beckerman had been managing the ad- 
vertising department of a firm in Maryland when he heard from a man- 
ufacturer' s representative about the Radio Shack vacancy, so he flew up 
to Boston for an interview with Deutschmann and Kornfeld and got the 
job. The advertising department at the time consisted of two other em- 
ployees, a copywriter and an artist. 

Beckerman recalled the company headquarters on Washington Street. 

"It was in a four or five-story brick building, with roughly 6,000 to 
7,000 square feet per floor, in downtown Boston not far from Filene's 
and Jordan Marsh. The main floor was parts and ham equipment, with a 
parts counter across the back. There was no stereo or audio on that 
floor. The audio was sold out of a room on the second floor, which was 
up a single, large staircase. Right behind the audio showroom, we had 
our offices. On the floor above that we had some warehousing and re- 
pair and industrial electronics. The building was across the street from 
Jurgen Park in an area that was later reconstructed as part of a federal 



132 THE CRUSADE IS LAUNCHED 

complex. It was taken over by the city in 1965 and is no longer 
standing." 

Beckerman negotiated the building's sale in 1965 and secured a bet- 
ter price from the city because of a sign on the structure that had be- 
come a civic landmark. The modernistic neon sign on an enameled 
background had been designed by a well-known local artist named 
Keppish as a symbol of the electronic age, Beckerman recalled. "I was 
able to get $200,000 more for the building than the city offered." The 
building was the only one in the nine-store Radio Shack chain that 
wasn't leased. 

Beckerman first met Charles Tandy in 1962, when Tandy was look- 
ing at a company named Brecks of Boston, a mail order firm that im- 
ported tulip bulbs from Holland. "Radio Shack also was interested in 
buying Brecks and that's when I met Tandy," Beckerman said. "Brecks 
was eventually bought by a Boston mail order firm, but I remember a 
conversation in which Tandy said he was interested in getting into the 
electronics business. He knew that Radio Shack was having problems, 
and he might have been fishing around, because he was curious as to 
what we thought the problems were." 

B eckerman recognized that Radio Shack ' s financial problems 
stemmed from the fact it was running on an assumed gross margin that 
was higher than its realized gross margin. "It was simply a matter of as- 
suming gross margins that weren't there and spending money as if they 
were." 

In addition, the Radio Shack mail order business was generating a 
tremendous amount of damaged goods. "All of those goods were fun- 
neled back, and we didn't have the kind of repair staff to refurbish 
the goods and return them to the inventory," Beckerman said. "So a 
large segment of the inventory consisted of goods that were essentially 
nonsaleable. This amounted to real dollars." 

Radio Shack was losing money in the mail order business. Becker- 
man continued, "Radio Shack was carrying its own revolving credit pa- 
per, and on a no-money-down basis. We were able to sell a lot of goods 

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uvivjoo uiv wuxxu y. jL-rt*.^ vvjlj.wj.jl _yuu iv kjitmit jlxx wttxxjLV/A±x±ct uxiu ywu. uvvv 

money to a company based in Boston, and your local credit is due, you 
pay your local credit first. So we issued a lot of bad credit, probably $6 
million or $7 million worth, and our assumed gross margin didn't in- 
clude these bad credits." 



THE CRUSADE IS LAUNCHED 133 

Inventories were badly out of balance, Beckerman contended. "Some 
departments were turning as slowly as once every two years, while oth- 
ers were turning six times a year. The balance of inventory was very, 
very poor. We also had too many stockkeeping units. We were incapa- 
ble of controlling the number of stockkeeping units." 

Beckerman's recollection of the April 1 meeting at the Ritz-Carlton 
was that there weren't more than a dozen Radio Shack executives 
present. 

"Charles told us he was taking over the company and that Radio 
Shack would undergo significant changes. He said what he was going 
to be doing for the first few days was talk individually to each of us and 
then make his decision as to the direction that the company would have 
to go. He told us he knew the hobby business through Tandy Leather 
and American Handicrafts and that he was familiar with store opera- 
tions and the mail order business, having done both, but that he didn't 
know too much about the industrial electronics business." 

Tandy closed his remarks that night with the reassuring statement, 
"There's no reason for productive people to feel threatened by the 
change in ownership." 

Charles Tandy's own version of what transpired that evening was 
contained in one sentence in the speech he made in April 1973 at 
Brigham Young University. 

"The night before, we had a good dinner and I introduced myself to 
my new associates and I said, Tomorrow morning there'll be a new 
ball game.'" 

Lew Kornfeld recalled being asked by Milton Deutschmann as they 
were leaving the Ritz-Carlton that night, "What do you think of Charles 
Tandy?" 

"He looks like a smart, hardworking man who's in a hell of a hurry 
and running scared," Kornfeld replied. 

"But did you see that red face and the hair in the middle of his fore- 
head that comes to a triangular peak? I think, by God, he's part Indian," 
Deutschmann persisted. "And there's something else. I think he's going 
to take this company into Chapter 11 and run." 

"Gee," Kornfeld said, "I don't see it that way at all, and if he wants 
me to stay around, I probably will" 

Tandy wanted to hit the ground running, so he convened a meeting of 
the Radio Shack board of directors early the next morning, April 2. 



134 THE CRUSADE IS LAUNCHED 

Someone believing in omens could have inteipreted what happened at 
the meeting as a less than auspicious harbinger for the new regime. 

One of the Radio Shack board members present that Tuesday morn- 
ing was George Cullinane, a former vice president of merchandising 
and advertising for a major mail order company in Chicago, who had 
for the past few years been a consultant to Radio Shack on mail order 
strategy. Cullinane suffered from a disease of the pituitary gland that 
caused a deformation of his face. 

"He wasn't the prettiest guy in the world, but he was a brilliant mail 
order mathematician and marketing man/' Beckerman said. "Right after 
the meeting began, Cullinane suffered a heart attack. He sat down at the 
board table with his pipe, had the heart attack, and died. They really 
hadn't even gotten started on the board meeting, except for exchanging 
banalities about the differences in the weather between Boston and 
Fort Worth." 

The board meeting was aborted. A shaken Tandy attempted to sal- 
vage the rest of the day by proceeding with another scheduled meeting 
with ten Radio Shack department heads and store managers. The ses- 
sion was held in Milton Deutschmann's dingy old office, which Tandy 
had taken over as his own. 

Lew Kornfeld, who was present, recalled Tandy holding a small 
piece of Ritz-Carlton stationery, about 6 inches by 9 inches, on which 
he had written a list of names in his left-handed scrawl. 

"This," Tandy said, squinting over his half-lens glasses, "is the only 
memo you are ever going to get from me. These are the names of the 
people that I'm keeping in management. You're my team." And he read 
off the names of the ten men in the room and their job assignments. 

"I was to continue as vice president of merchandising and advertis- 
ing," Kornfeld said. Tandy now addressed himself individually to the 
chosen ten, beginning with Kornfeld. 

"Now, as far as merchandising and advertising are concerned, I want 
you to reduce your staff by half." 

"Which half?" Kornfeld asked. 

&<T i I*. ....... t> np_„j._- _t. -.*. i i_ ten— l J ?x r:„~ i„„. j.., <r\j?r aa 

l uajmi t c-aiu, x CLiavxy otiut uciviv. x^uli iaisju t mv txxtj uk/\j.j, vii^i uxvui 

all jobs as store managers." 

"Which stores?" Kornfeld wanted to know. 

"Don't worry about the stores," Tandy responded. "You find me the 
store managers and I'll keep them occupied until we open the stores, 
because, by God, we're gonna open stores." 



THE CRUSADE IS LAUNCHED 135 

Kornfeld' s recollection of the number of stores Tandy was talking 
about was vague. "I know he wanted to put stores where our customers 
were, which made good sense. You don't want to put stores where 
there are no customers. And we knew where our customers were be- 
cause that's where the mail orders came from. But, I thought at first 
that we had a goal of 30 stores for the first year, which meant that we 
would open either 21 more or 30 more, and it wasn't important which 
number was accurate." 

Recalling the meeting, Kornfeld reflected on the way Tandy was per- 
ceived by the ten men he had selected as his teammates. 

"Tandy," Kornfeld said, "had eyes that reflected or mirrored or exhib- 
ited no fear and absolute confidence. You felt that basically he was go- 
ing to do what he said. And if it didn't happen that instant, nevertheless 
it would actually happen. So Tandy doled out these ten jobs and then he 
said, T'm going to tell you this as bosses. One out of every ten employ- 
ees is a crook." 

As the ten men in the room looked at each other speculatively, count- 
ing the number of people which added up to ten, Tandy added, "I want 
that crooked son of a bitch out of here when we find him, and we will 
find him, believe me." 

Kornfeld paused for effect. "Well, to make a long story short," he 
continued, "one of the ten turned out to be a crook. This bore out 
Charles's basic rule of thumb, if it wasn't in inventory or in the bank, it 
was stolen." 

Among those to whom Tandy offered a store manager's job, Korn- 
feld disclosed, was Radio Shack's President, Norman Krim. 

"He offered Krim a job managing a store, not one of our nine existing 
stores, but one of hundreds of new stores that, at the time, existed only 
in Charles' mind," Kornfeld said. 

"A store! Where?" Krim asked, deeply offended. 

"Well, how about Philadelphia," Tandy said. 

"No, thanks," Krim replied. 

"So, you see," Kornfeld continued, "Krim wasn't fired. He was of- 
fered a real job, but turned it down and quit. As Tandy said on his first 
day in Boston, 'I want everyone here to stay on, but at the job I want 
him to have.' Nobody was to be laid off. They'd have to quit of their 
own free will." 

The strategy that Charles Tandy devised for restructuring Radio 
Shack into a profit-making machine and developing it into a national 



136 THE CRUSADE IS LAUNCHED 

chain was bom primarily from his experience with the Tandy Leather 
Company, Kornfeld expounded. 

"His theory was to have lots of small stores and a limited number of 
stockkeeping units. They are called SKUs, and at that time we had 
somewhere between 15,000 and 30,000 SKUs depending on the indus- 
trials and all that other stuff. And it was Charles' plan to go out of mail 
order, maybe not instantly. But it was within the mxi year or two that 1 
stopped putting mail order coupons in the catalog." 

It was Tandy's idea, Kornfeld continued, to lower the number of 
stockkeeping units to 2,400 units. "This was probably the number he 
had in his other businesses," Kornfeld guessed, "or it might have been a 
multiple predicated upon the fact that our electronic stores did more 
volume per annum per square foot per employee than his leather stores 
did. But it was very obvious that the smaller number of SKUs would 
make it easier for everyone to understand the business, particularly the 
customers." 

Tandy aspired to go to a total private label operation, and he also 
wanted to begin manufacturing some of his own merchandise, Kornfeld 
declared. 

"I already loved private label and I was dying to get into manufactur- 
ing," Kornfeld continued, "so he and I were on the same wavelength. I 
actually had started us in private label in 1954 with phonographs that I 
had made by others for our brands. After 1955, when I first went to the 
Orient, we had quite a few items. And while the number of SKUs was 
not large, the number of dollars was." 

By 1963, Kornfeld estimated, Radio Shack's private label business 
amounted to about 15 percent of its total sales of some $14 million. 

Tandy's first act after acquiring control of Radio Shack was to carry 
out his threat to get rid of the chiefs and promote the Indians. 

"He got rid of that whole echelon of top management and kept the 
merchandisers and advertisers," Dave Beckerman related. "He retained 
Lew Kornfeld and me and Dick O'Brien, who was in charge of mail or- 
der and all of the store managers, and got rid of all of the levels above 

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lllClL 11C illdUt; I.jC'VV UIV OVJUUV/I VJXX1W1 ciixvi- muuv HiV haw uwv/aav*. wvajijivi 

officer as general manager of Radio Shack. I was in charge of the stores 
and the warehouses." 

Beckerman recalled, "The first time I heard Tandy express his 
dreams of what he wanted to do with Radio Shack was shortly after 



THE CRUSADE IS LAUNCHED 137 

that. The first thing he did was hold a store managers meeting. That 
was the first time he expressed publicly his plans for opening up hun- 
dreds of small retail stores. He had expressed that privately to Dick 
O'Brien and to myself, and had instructed us to let people go whose ex- 
pertise could not be translated into store operations. If someone showed 
the potential of becoming a store manager, we tried to keep him in 
some job and then moved him out to a store as fast as possible." 

When Tandy spoke of his plans to open hundreds of stores, it sound- 
ed "a little far-fetched," Beckerman said. "There was no electronics op- 
eration in existence at the time that had that many stores. But he had 
the feeling that if he could put in 250 Tandy Leather stores, he could 
certainly put in that many Radio Shack stores. So it wasn't a wild num- 
ber to him." 

Bernie Appel' s recollection of the first days after the Tandy takeover 
was that they were marked by turmoil and lots of meetings. 

"He had to decide whom he trusted and whom he didn't," Appel re- 
vealed. "One of the people he didn't trust was the vice president of re- 
tail sales, who tried to get political. Charles didn't like political people. 
He wanted to hear it like it was. He didn't want stones thrown around 
management. He thought that the way to run a business was with every- 
body above board and trying to get along with everybody else. He was 
a very ethical person. He never lied to any of us. He told us what he 
honestly believed. He had incredible integrity." 

But during the period immediately after the takover, Appel and the 
other Radio Shack employees had some doubts about their new boss. 

"Here was this young, brash guy from Texas, with a big cigar in his 
mouth, who had no knowledge of the consumer electronics business. 
He didn't know what electronics was all about. And here he was telling 
us that he was going to show us how to run our business, teach us how 
to make money, show us how to open a lot of stores. We thought it was 
wild. We thought he was full of bull. How could you blame us? He was 
talking about 500 stores. We thought that was crazy. He said we could 
do it in the next few years. Who could believe that when all we had at 
the time was a handful of stores." 

Over the course of the next two weeks, Tandy laid out "a very dili- 
gent program with a lot of hard work," Appel reported. "He didn't be- 
lieve in writing memos. He told us what he wanted. He went away one 
weekend and came back with a whole reorganization plan for the corn- 



138 THE CRUSADE IS LAUNCHED 

pany scribbled on the inside of an American Airlines ticket. He came in 
and said, 'Gentlemen, you're going to need so many buyers, so many 
store managers, so many of this and so many of that. You're going to 
carry this many products. These lines will be thrown out.' He came in 
with a whole program of where we were going, what our direction was 
going to be, how many stores we were going to open." 

Appel recalled one of Tandy's early ideas that backfired on him and 
was promptly changed. 

"Charles came up with a plan that everybody that wanted to stay in 
their current position would have to take a 10 percent pay cut. Every- 
body who would be willing to work in their current position, knowing 
that they would eventually become a store manager, would not have to 
take a pay cut. Well, for one full day there was a lot of confusion. I per- 
sonally decided to remain a buyer. I didn't want to become a store man- 
ager. But I would have left if I would have had to take a cut in pay. But 
by the end of the day, the pay cut was rescinded." 

Appel, as it turned out, was one of the few people who received a pay 
raise after Tandy took over Radio Shack. The reason, he said, was that 
he had had a prior agreement with Lew Kornfeld about the pay hike. 

"So I got the raise because it was promised to me," Appel said. 
"Charles screamed bloody murder when he heard about it. 'Why would 
you give him a raise? Nobody else is getting one!' 

"Lew Kornfeld and Dave Beckerman explained to Charles that I was 
a professional and that if the company wanted to maximize my talents, 
it had to live up to that commitment. We were only talking about 
$5,000 a year. But from that day on, Charles Tandy called me 'The Pro- 
fessional' That was how he rubbed it in." 

Tandy's basic program for Radio Shack, Appel said, had six major 
elements: 

• Get out of things that were not electronic. 

• Cut down the mail order business. 

• Open stores in zip codes where Radio Shack already was strong. 
s ly/foV^ if easier for the customers to shot). 

° Cui down the sioukkccping uuiis. 
° Advertise like hell. 

"Soon after, he also came to realize that brand name, with other peo- 
ple's brands, was not a way to go," Appel added. 



THE CRUSADE IS LAUNCHED J 39 

Appel remained convinced that Tandy had a misconception about 
what Radio Shack really was when he made the deal to acquire control 
of the operation. 

"I think he believed we were really and truly a hobby house, selling 
small parts to hobbyists. And that's what he wanted. He then came to 
realize that we happened to have some real strength in radios, in hi-fi, 
tape recorders, phonographs and whatever the products of the day were. 
We were selling finished end equipment, rather than parts and pieces, 
and that surprised Charles. But that didn't cause him to lose a beat, be- 
cause when he realized it, saw our strength in it, he said, 'Okay, this is 
the business we're in. They can both get along. But, in order to do it, 
you need more gross margin in your end equipment, and you can't get 
it in brand name. You've got to go private label.' " 

A week after Tandy's takeover of Radio Shack, the phone rang in 
Bill Brown's office at the First National bank of Boston. Tandy was on 
the line. He had just flown into town after a weekend in Fort Worth. 

"Come on out to Radio Shack," Tandy told the banker. "I want you to 
see something." 

When Brown arrived, Tandy escorted him into the warehouse, where 
boxes of merchandise were stacked to the ceiling. Tandy began show- 
ing Brown the dates that were stenciled on the crates. 

"There were all these boxes with out-of-date years stamped on them," 
Brown recalled. "Charles said, These things have model years, just 
like automobiles. All this out-of-date inventory has to go.' So he put all 
that obsolete merchandise in a tent on Commonwealth Avenue and had 
a huge sale." 

Dave Beckerman remembered that first tent sale. 

"It was on the parking lot right alongside our store at 730 Common- 
wealth Avenue. Things were marked down substantially — 40 percent, 
50 percent, 60 percent off. We ran big newspaper ads and we generated 
very large volumes and an awful lot of cash, which we needed, because 
we had very little cash flow." 

No one buying that obsolete merchandise under a canvas top that 
spring day in Boston in 1963 could have possibly foreseen what would 
evolve from that humble beginning. 

The first step had been taken. 



Chapter 10 

Confrontation at the Waldorf 



Charles Tandy's recollections of the eventful first days following his 
takeover of Radio Shack, when he found himself spending more time in 
a Boston hotel room than he did in his apartment in Fort Worth, are 
contained in a videotape of a talk he made to a group of students at the 
Massachusetts Institute of Technology in Cambridge, Massachusetts, in 
April, 1978. 

The presentation was vintage Tandy, rambling, off-the-cuff, down- 
to-earth, with a variety of pungent and insightful asides, and refreshing- 
ly devoid of academic pretension. 

"I was never a very good student," he informed the group in his 
opening remarks, "but I was a damn good salesman. And I've discov- 
ered since I entered that field, and I entered it young, that it is probably 
one of the most important things in the business development of the 
United States." 

At the time he took over Radio Shack, Tandy told his audience of as- 
piring scientists and engineers, Norman Krim, an engineer, was serving 
as president. 

"He'd been put in as sort of an interim president by, I guess, a combi- 
nation of banks and directors and so forth, because the company had 
been undergoing some bad times and they thought they needed a new 
head," Tandy related. "Here's a company that was supposed to be elec- 
tronics, so let's hire an engineer. Well, Mr. Krim was very qualified as 
an engineer, very qualifed as a business executive, but he'd never sold 
anything. I was sort of the last resort. They couldn't find anybody else, 
so they called on me in Texas. They knew I didn't know anything about 
electronics, and I still don't today. And I don't intend to. I don't have to 
know how to run a sewing machine in order to know how to sell one. 



141 



142 CONFRONTATION AT THE WALDORF 

That's for somebody else. The same way. it's often been said, 'Whis- 
key's made for selling, not for drinking.' 

"There has been a revolution in engineering and design, things 
learned in a school like this/' Tandy conceded, "but what's made them 
possible are the distribution systems that have been developed. The one 
thing that attracted me to Radio Shack was that it did have business. 
They did have a quantity of customers. Now, I've heard it said ever 
since I took over Radio Shack that we lack a name brand, a national 
brand. Well, in studying the process, I looked and said, 'What is a 
name brand?' 

"I found out, in rethinking it in my own mind, if I bought something 
from a merchant, I expected the merchant to stand behind it. When I 
bought something from Jordan Marsh, I knew they would stand behind 
it. Incidentally, when I was going to Harvard Business School, I worked 
at Jordan Marsh, and they have an impeccable reputation of satisfaction 
and fair play, fair trade and customer satisfaction. I don't think anybody 
comes close to being second in this marketplace. They earned that rep- 
utation. They expect it of their salespeople, they expect it of their mer- 
chandise, they expect it of everything. So I said, 'What is a name?' 
Here's Radio Shack. The public comes to it. They come to it by the 
thousands. The only problem is, and it is very simple, they're spending 
more than they're taking in. So all we gotta do is change that. 

"Our first approach was to analyze what it is we were selling, whom 
we were serving, and study that as quickly as possible. I'd spent some 
time on this prior to coming into this field, because I had wanted to be 
in the electronics do-it-yourself field. So I had a pretty good idea al- 
ready to whom we were going to be selling, what we were going to be 
selling, and what was left were just the details of the supply system. 

"Well, at that time, Radio Shack had a catalog of some 500 pages. I 
wish I'd brought one of the old catalogs with me so you could see what 
it looked like, because not only did they have hi-fi and speakers, wire 
tape, and ham radio gear, there were tires and go-carts, and there were 






looking at all of the different kinds of things that we were supposed to 
be. And I said, 'Now, what really and truly does a Radio Shack custom- 
er expect to find?' You can sell anything, even bananas, if you put 
them in the store. But is this the place people go to buy bananas? So I 
tried to create the image of what I saw as a Radio Shack. Hopefully, it 
would be what our customers would see as a Radio Shack. 



CONFRONTATION AT THE WALDORF 143 

"Keep in mind," Tandy told his now rapt audience, "this company 
was losing a couple of hundred thousand dollars a month. And they 
didn't send for me to let me experiment around and lose another two, 
three, four million dollars. The First National Bank and the State Mu- 
tual Life of Worcester were the big bankers, the big bankrollers in this 
company. Well, I came to the hard conclusion, because the new catalog 
had to be done, that the peripheral items had to go. As you know in 
your own life, there are certain courses you do well at and there are cer- 
tain other courses you don't do well in. Well, life out here is the same 
way. You can be a jack of all trades and a master of none, as you've 
heard for years. 

"We wanted Radio Shack to be a specialist, not to be everything to 
everybody. That's the reason you don't find television in our stores. 
That's the reason you don't find records. You don't find a lot of things 
in a Radio Shack store. We have manufacturers come to us and say, 
'You should have this.' Well, maybe we should and maybe we 
shouldn't. Our first criterion today is can we make a profit? And if we 
see we can't make a profit, who needs it? Let them go buy their bagels 
or their pretzels somewhere else. 

"So we took that catalog of 500 and some odd pages, and I sat the 
merchandise department down and I said, 'Look, here's basically where 
we want to be. We want to be a specialist in electronics, specializing in 
the do-it-yourself field, the guy that's gonna put up his own antenna, 
the guy that's gonna repair his own telephone, the guy that's gonna fix 
his own hi-fi. We want those pieces and parts. We're not gonna be a 
big research house. At that time, they had an industrial division that had 
25,000 to 35,000 different parts in it. I said, 'We're gonna reduce this 
down to a minimum number of items that we can specialize in. We 
want to analyze every item, how many of them we've bought in the last 
year. And, in the meantime, while you merchandise department people 
get hold of that, we want to come down to not over 2,500 stockkeeping 
units." 

Tandy asked, "I don't know how many of you have ever been to a 
Radio Shack store. Is there anybody here who hasn't?" Satisfying him- 
self that no one in the room fell into that shameful category, he detailed 
how, when he had taken over Radio Shack, ham radio operators had 
been able to go to a Radio Shack store and buy $1,500 Collins trans- 
ceivers. "Are there any hams in this room?" he asked. One arm shot up. 
"We got one, I see," Tandy acknowledged. "Well, the transmitters they 



144 CONFRONTATION AT THE WALDORF 

use, they can talk to Russia, they can talk to South America. They have 
no limitation on the kind of power they can use. But, when they want to 
buy a new piece of equipment, they want to trade in an old piece. Well, 
I'm not in the second-hand equipment business. And we weren't going 
to be in it. But that's what they were doing. 

"The number of hams in the United States today may be half a mil- 
lion," Tandy noted. "The number of CB radio users in the United States 
is, like, 20 million. So the market potential is where? Now the hams are 
going to spend a lot more money individually, but the ham doesn't buy 
very often. Once he buys it, he keeps it, so that you don't get that re- 
peat factor. But a man who's got a CB rig, when he changes cars he's 
gonna buy another one. At the outset, we left the ham goods in and we 
left some of the marine things in. We left a variety of parts in. But we 
started in on the details of how you actually control a business." 

His first two priorities after taking over control of Radio Shack, 
Tandy disclosed, were getting the right kind of merchandise on the 
shelves and upgrading the gross margins. "Merchandise is where you 
start," he asserted. "Now we had to select the merchandise out and we 
had to change the gross margins. Now, what they were paying for the 
merchandise and what they were getting for it came to a 26 percent 
gross margin. Do you all understand 26 percent gross margin? It costs 
you a dollar, you put 33 percent onto it, and you've got a 25 percent 
gross margin. We always figure gross margin from the sales price 
down, not from what you paid out. Some people say, 'You've got a 100 
percent gross margin.' There's no way in the world to have a 100 per- 
cent gross margin unless you use mirrors. A 50 percent gross margin is 
when you buy it for a dollar and sell it for two dollars. And that's the 
way you want to run things in the business world. 

"All right, how were we going to go about changing that gross mar- 
gin? Well, it's so simple when I tell it to you that you're going to want 
to ask the question, 'Why didn't they do it before? Why didn't they 
think of it before?' Weil, keep in mind the important name was Radio 

in mind that we were going to maKe it good if u wasn't right. We were 
going to check the quality before it went out. And we were going to 
spend the money to advertise it. We were not going to use RCA's 
name, and then pay them for the product and pay them for their adver- 
tising when they were selling everybody else. 



CONFRONTATION AT THE WALDORF 145 

"We took one item at a time. And we traced down that product, be- 
cause there is always somebody else that's manufacturing that product 
somewhere that doesn't have to pay for all that advertising that Proctor 
& Gamble, Standard Brands Food, or some other company puts on that 
product. We went to the Orient. We went to Europe. We went all over 
the United States looking for an item at a time. We knew what the 
specs were, and what we wanted was a product that would work and 
work adequately, that would be a fair trade of that customer's dollar for 
our piece of merchandise. We reduced our cost of merchandise. We 
didn't raise our prices. That's the easiest way to go broke. You know, 
change the price of your coffee from 25 cents to 50 cents. The public is 
not stupid. And so many people think that they are. They are not. We 
wouldn't have the 21 million customers at Radio Shack, the 21 million 
families that come back and come back and come back, if they hadn't 
already known something about values, if they hadn't already checked 
us out. You can't fool the people. You can't just take a hi-fi machine 
and say, 'That's $200 and now it's $400.' No way. People are not fools. 
They want to compare quality. They want to compare value. And that's 
what you've got to give them. Let me give you an example. I'll give 
you a little cute one. This was a trick to show my merchandisers how to 
think. 

"Do you know what a receiving tube is?" he asked. "Anybody here 
know what a receiving tube is? Well, when radios first came out, they 
all had one big tube in the back and five little tubes. They called them 
an AC-DC package. They were in all the kitchen radios. They were all 
over the place. When a tube went out on you, you had to replace it or 
get a repair man to fix it. Tubes were a very easy product to sell. Radio 
Shack carried General Electric, they carried RCA, they carried West- 
inghouse, and they carried a couple of other brands. I said, 'Hell, we 
don't need all those brands.' 

"Raytheon was sitting here in Cambridge," Tandy continued. "Now, 
remember, I don't know nothin' about electronics. I only know about 
business. I'm just a businessman and I've got a common-sense head on 
my shoulders. RCA would come along in the summertime and say, Tf 
you'll buy big cases of these tubes, we'll give you six months to pay 
for them. We'll give you a lot of free merchandise.' And I'm sitting 
there thinking, 'There's not a lot of profit in those tubes. How can they 
afford to do that?' So I called up each one of the suppliers, General 



146 CONFRONTATION AT THE WALDORF 

Electric, RCA, even went out to see RCA out in Harrison, New Jersey, 
wanting to know if they'd private label for me. 

"I asked them all, 'If we throw out all the other manufacturers and 
give you all our business, what's the best deal you'll give us on buying 
tubes from you?' They all came back with the same price. All except 
Raytheon, because Raytheon wasn't on our shelf, you see. And that's 
one of the first things you need to do. Find a guy that's not getting any 
of your business, and he's a little more anxious to talk to you. So Ray- 
theon came over with flip charts and so forth, and I said, 'Teach me 
about the tube business. I don't know anything about it. But I've just 
got the feeling that there are some things I ought to know about it, be- 
ing president of my company.' 

"They came over and they said they would private label for us. And, 
with that, they were out from under the fair trade laws. They could give 
us a private label and save us 10 to 12 percent. Well, 10 to 12 percent 
on a million dollars, you know, gentlemen, is more than $100,000, and 
I don't find that money easy to come by even today. And they kept 
turning the charts and they said, 'Now, we have OEM prices and we 
have distributor prices and, then, we have OTM prices.' Now that was 
one I hadn't heard of. I'd heard of the original equipment manufactur- 
ers. You know, if Zenith's gonna buy a bunch of tubes, they're gonna 
get a special deal. But OTM? 

"So I asked the Raytheon guy, 'What's OTM?' 

'"Other tube manufacturers.' 

'"What do you mean?' 

"And he said, 'Well, we're the only company that makes an OT-4, 
which is a tube used in an automobile radio, and we make them for 
RCA and Westinghouse and everybody else.'" 

Tandy whistled. 

"Now I'm really learning," he confided. "I mean, it don't pay to be 
smart. It pays to be dumb, to just ask questions. And he says, 'Yeah, 
we've got different prices when we trade tubes between ourselves. 



Ox U-O 



"And I said, 'How much difference is mere in tnose prices/ uo i 
have to become a tube manufacturer?' 

"And he said, 'I can't give you that OTM price because you aren't a 
tube manufacturer, but we've got still another one.' 



CONFRONTATION AT THE WALDORF 147 

"And I said, 'What's that? 5 

"And he said, 'Imported tubes. We are completely familiar with and 
we're involved with the importation of tubes from all over the world.' 

"'All over the world?' 

'"Yeah, Spain, Portugal, South America, Japan...' 

"And I said, 'Well, what about the quality?' 

"And he said, 'We'll guarantee the quality right on the table.' 

'"How about the price?' 

'"Fifty percent cheaper.' 

"Did you hear that?" Tandy queried his audience, his voice rising in 
disbelief. "Fifty percent cheaper. I asked, 'Do you put my name on 
'em?' 

"'All right.'" 

There was a pause as Tandy let the magnitude of what he had just de- 
scribed sink in. 

"So we shook hands on it," he continued. "Now I called in my mer- 
chandising staff. We only had three or four people at that time, and I 
outlined the deal to them. I said, 'Gentlemen, this sounds pretty good. 
What do you think we ought to do?' 

"'Oh, boy, we ought to take those tubes and just cut the hell out of 
the prices and sell a lot of them.' 

"I said, 'Oh, no, oh, no, that's not what we're gonna do. I'll put the 
problem to you the other way. How are we gonna get more for these 
tubes than RCA gets for their tubes when it costs us half as much?' 

"Well, I might have hit them on the head with a baseball bat, as far 
they were concerned. It never occurred to them for one moment that 
you can get more for a piece of merchandise that costs you half as 
much. Anybody got an idea what we did?" 

There were a few scattered responses to the question, all of them 
wide of the mark. 

"I'll tell you what we did," Tandy said. "We gave a lifetime guaran- 
tee on the tubes. If any one ever broke, we gave you a new one. And 
we guaranteed we'd give you a new one. And we still do that. Unfortu- 
nately, the tube business is going down the drain because we don't use 
tubes any more. But this was an object lesson, and I give it to you be- 
cause it's an important lesson. People would rather have you guarantee 
something and make it good than they would have it work. 



148 CONFRONTATION AT THE WALDORF 

"I've had men come in with the five tubes out of an AC-DC radio set 
and throw them all away, never test one of them, and say, M want your 
new, guaranteed tubes.'" 

Tandy permitted himself an ear-to-ear grin. 

"Well, I had a little advantage there," he admitted, "because I had 
some information about those tubes. It seems that the average set of 
those tubes had been in existence about seven years. The first failures 
started about the end of the third year. So, if I had to replace one tube, 
the chances were that it would last three more years. And if there were 
any other failures, if d be in the other tubes because the new tube was 
stronger. So the customer was going to have to come back with the 
other tubes, and I'd have the chance to get him then. 

"Here's what we promised, 'Our tubes will last as long as your radio 
set or we will replace them free.' Now, in our stores, we still had the 
RCA tubes when we put the new ones in. And we were charging 10 
cents a tube more for the new tubes. The store managers were on a per- 
centage of the profits. What do you think the store manager did when a 
guy came in to buy a tube? Which one do you think he sold him? The 
RCA tube or the lifetime guaranteed tube? Which one would, you have 
sold if you were going to make twice as much money? 

"It improved my merchandisers without a question of a doubt," 
Tandy summed up. "Those men on the floor found out that the name 
Radio Shack was stronger than the RCA name, and they'd always 
leaned on the RCA name. And that was all I was trying to prove to 
these guys that, number one, the place of business where the customer 
is being served is the most important place for you to give service, to 
give quality, and your own name is that much more important. When I 
hear of a nationally-branded name, and I know that we do $1 billion a 
year, I'm like Texaco. We've got that star everywhere. And I don't care 
what other brand out there you call a national brand. Baby, we've got 
more business than they've got. And what makes a national brand? You 

*-% rt + rt «1 y r»on Unx; T^o-rlt/-* QVior»V inprplipnHiop 1T1 thp» T Tnitp^ S^f^^C Hilt 111 
IkXJl KJllly tail CLtY XVdCtlVJ' Uliav^lV AJ.±VAVXl.CiAAV*iu»W xn mv vJiAiLVv* 0*-Uv^^r, ^*** *** 

40 other countries, all over Canada, England. Belgium, Holland, Ger- 

-*-* c* . i .. i .......*... .-.. ...j.,.. :.. hp_i „ nri„„x5„ — u„*. ,K«„ 

Illfclliy, JTIcUlVC, CVCJU IIVC ^IV^VIIUMIIVO OtOlvo ill luaju, jl aac*l a wnui umxvvu 

a national brand. 

"I was playing games with those tubes," Tandy conceded. "I was try- 
ing to teach my men that you don't have to sell merchandise for what 



CONFRONTATION AT THE WALDORF 149 

you paid for it, that you can make a reasonable profit. Then, when you 
do your pricing, people will believe you. I had to show them that we 
knew how to sell merchandise. It took time to do it. It took time to train 
them. It took time to get the men together. But this is the kind of think- 
ing that went on in the building of a merchandising team. 

"Who taught me how to do these things? Well, I had a wonderful 
dad, but he'd gone for years on the old theory that you need brand 
names, that you set prices the way everybody else does. Not at Radio 
Shack We've got our own ideas, our own merchandise." 

There was one business he decided he didn't want to be in, Tandy ad- 
mitted. "You'll never see a repair truck running around Boston with the 
name Radio Shack on it," he averred. "Anything that doesn't work 
right, you come to the Radio Shack where you got it. Bring it back with 
you. Everything's portable. Why? It costs a ton, an arm and a leg, to 
send a repairman to your house. That's the reason our merchandise 
comes in components. Unplug them, bring the speaker in, bring the 
other parts in. Bang. You can't send a repairman to somebody's house 
for under $15 or $20. And who's gonna pay for it? You're gonna pay 
for it. And I don't want to charge you for that. Take it to somebody 
else, because I don't make any money doing that. And, secondly, you 
get mad. 

"This way, you come in. We look you in the eye. We've got our 90- 
some repair stations across the country. We give you that service. And 
if it's not working just right, we don't try to fix a sick transistor radio. 
We give you a new one and throw the other one in the second-hand 
box. You can't afford to repair it, not with the cost of labor and repair 
today, again keeping in mind what we faced at the outset, that we want- 
ed to take in more than we put out. I'm trying to draw this all together 
in a picture for you," Tandy continued, "because you have to conceive 
in the business world where you fit, who you are and what you're qual- 
ified to do. Then you use the common sense behind it, because there 
has to be a spread, there has to be a difference, between what you take 
in and what you put out. We say on everything we do, 'How do we 
save on this? How do we save on that?'" 

# # # 

In an interview published in The New York Times on July 28, 1963, 
Charles Tandy told the reporter, Clare M. Reckert, of a disappointment 



150 CONFRONTATION AT THE WALDORF 

he experienced when he was 15 years old while he was selling ladies' 
shoes. He thought he would be paid a weekly salary plus commission. 
Instead he got only a commission. 

Before making a long-term commitment, he insisted on a "pre- 
marriage trial arrangement" for a term of at least six months, and he 
made this a proviso in both the Cost Plus and Radio Shack deals. At the 
time the article appeared, Tandy's trial marriage with Radio Shack was 
well into its fourth month. He was spending the better part of each 
week in Boston, flying home for the weekend and returning Sunday 
night. In Boston, he operated out of Milton Deutschmann's former of- 
fice above the Commonwealth Avenue store, directing the activities of 
a steady stream of Radio Shack underlings who trooped in to receive 
their orders for the day. 

From the office, Tandy's voice could be heard reverberating through 
the premises, exhorting people to "get their heads out" and to "shape up 
or ship out." 

From the outset, it was apparent that the "hotshot from Texas," as he 
was derisively known, had a job on his hands convincing the Boston 
cadre that he knew what he was doing. After all, what did the leather 
merchant know about the electronics business? 

"Most of all, the people in Boston couldn't believe it was possible to 
get the kind of numbers that Charles wanted," Luther Henderson said. 
"They had been operating on a 26 percent gross margin and Charles 
was insisting that was much too low. He got a lot of resistance on that. 
'You can't do that.' 'The public won't buy this.' Radio Shack also had 
a credit business that had to be stopped." 

"It was obvious to Charles from the start," Bill Michero said, "that a 
number of top management decisions had been made in the past that 
had just killed, had just gutted Radio Shack as a business. Credit was a 
real back-breaker, but they had also wandered off into toys and auto 
supplies and all kinds of things. So there were some obvious curative 
measures that had to be taken. It was a matter of eliminating the non- 

o1o/>ftvyrii(^ rrr\r\r\o r;]f;^tiir> rr QriH CUfillff tll£ CfCdlt T\TBCtiC£S, Simplifying 

tne product line, and installing a more focused advertising and maikcL- 
ing effort." 

According to Henderson, Radio Shack's most obvious weakness was 
its inventory. "It was not only large, but there was also a poor selection 
of merchandise. It required a huge reduction in merchandise, and this 



CONFRONTATION AT THE WALDORF 151 

meant that the Radio Shack people had to learn to live with a much 
smaller level of merchandise than they were used to living with. The 
old management had gotten used to the First National Bank of Boston 
giving them all the money they needed, so they had never had to be 
careful in the use of money." 

Reducing the number of stockkeeping units became Tandy's number 
one priority, David Beckerman said. "We did it in a most simplistic 
fashion," he reported, "based on the theory that 80 percent of your sales 
comes out of 20 percent of your inventory. We took our first pass at 
Radio Shack's inventory and Tandy said, 'Let's identify the 20 percent 
that represents 80 percent of the sales.' Having done that, we were now 
down to 10,000 items, which he felt was still too many. So we made an- 
other sweep on the same 80-20 basis and we wound up with 2,500 
units. That left us with 40,000 items that had to be discontinued. To get 
rid of them, we held a series of tent sales to generate cash out of them. 
You might say that this really depreciated Radio Shack's inventory, but 
in essence Radio Shack's inventory really depreciated itself by lack of 
turn, not by anything that Tandy did to it. All that Tandy did was rec- 
ognize that the inventory didn't have the value in it to begin with. So he 
got rid of it." 

The key to attaining the higher gross margins Tandy was demanding 
lay in the Orient, Henderson said. "Charles had become familiar with 
buying in the Far East because of our import store business, and he 
quickly recognized that he was going to have to emphasize overseas 
merchandise with Radio Shack instead of letting it be ancillary to the 
brand names. Radio Shack, at that time, had brand names. That was an- 
other thing he got a lot of resistance on. His people would tell him, 
'We've got to have Fisher's name. We've got to have Gate wood and all 
of the other brand names.' Charles felt, and he was proven right, that 
the public didn't really know all the brand names. 

"Charles said, ' A customer coming in off the street is coming into a 
Radio Shack to buy, and so I want to promote Radio Shack's brands.' 
And this was one of the big changes he made in their operations. Real- 
istic products were already being imported from Japan through A&A 
Trading Company. It was only later that Tandy began making his own 
products. But, initially, Charles looked to the Orient to try to find the 
cheapest source of merchandise for Radio Shack." 

In Lewis Kornfeld's recollection, it was Tandy's idea to buy mer- 



152 CONFRONTATION AT THE WALDORF 

chandise anywhere that the price and quality were right. "It just hap- 
pened that the Orient was the oyster we'd already opened," Kornfeld 
declared, "and it had a lot of pearls in it." 

In his book, To Catch A Mouse, the title of which was derived from a 
Charles Tandy saying, "If you want to catch a mouse, you've got to 
make a noise like a cheese," Kornfeld said he found a singular lack of 
high-tech merchandise in Japan on his initial merchandise-hunting jun- 
ket in 1955. "There were no transistor radios, no real hi-fi. The only re- 
corder I saw was a knock-off of an Ampex unit called Jampex. I did 
visit one television set manufacturer named Yao, where I was told that 
not many Japanese could afford to buy TV sets because of their aver- 
sion to owing money. This company agreed to clone our hitherto Amer- 
ican-made 10-watt audio amplifier at a landed cost of about 33 percent 
under what we were paying our Midwest supplier, and it became the 
first Radio Shack 'Realistic' electronic product made overseas." 

Kornfeld also brought with him, on his 1955 buying expedition, an 
all-transistor pocket radio made in the United States that he wanted to 
have copied. But the radio that had cost him $50 in Boston proved un- 
copiable in Japan due to a lack of transistors and know-how. "When we 
finally had radios made there for our Realistic line, we sent American 
transistors to Japan in American shoe boxes," Kornfeld reported. 

But there were some other things that Kornfeld found in abundance 
in Japan, among which were "skillful, dedicated workers and manufac- 
turers eager to export and anxious to manufacture to our specifications 
and under our brand names." The manufacturers, Kornfeld added, were 
undeterred by the comparatively small Radio Shack order quantities, 
"which had been laughed at by most of the domestic and European ven- 
dors we had previously approached." 

Kornfeld recalled that Charles Tandy arrived on the scene "gung ho 
on private label." He could hardly wait for Radio Shack to close out the 
national brands. Previous management had sought to carry enough 
stock to satisfy anyone who walked in off the street, but Charles 
Tandy's position was, "We have only what we have, our own brands, 
and we'll try like hell to sell you something." 

Bill Brown questioned the strategy. In his characteristically bravado 
manner, Tandy told him, "I'm gonna sell so much merchandise, I'll 
make my own brand name." 

So the course was charted. 



CONFRONTATION AT THE WALDORF' 



153 



Inventories were reduced, the product line pared, profit margins 
hiked, private labels installed, new stores opened, the credit business 
dissolved, and a start made on the eventual elimination of the mail or- 
der operations. 

"When Tandy was formulating his operating program, he called in 
every executive and asked us things like, 'What do you think we need 
to do?' 'What's wrong with what we're now doing?'" Dave Beckerman 
rec&iieu. "in. my conversations witn iiixn, i was not protective ox me 
mail order business, in which I had the most expertise, because I knew 
it was doomed. I knew it was unprofitable. To be protective of it was to 
be suicidal, if not immediately, then later on. My analysis of it was that 
the mail order business was not good for Radio Shack. The retail busi- 
ness was good for Radio Shack, but not the way we'd been running it. 
And Charles quickly concluded that the mail order business was gener- 
ating poor returns and that the cost of operating it was onerous." 
Meanwhile, Radio Shack was running out of cash. 
Faced with the problem of keeping the patient alive while his mouth- 
to-mouth resuscitation was being applied, Tandy once again turned to 
his banker friend in Boston, Bill Brown. 
"I need half a million dollars to tide me over/ 5 Tandy told Brown. 
"I'll lend it to you provided you put another $100,000 into Radio 
Shack," Brown responded. 
The deal was consummated on May 25, 1963. 
In return for advancing the $100,000 in the form of a loan to Radio 
Shack, Tandy Corporation received the exclusive right to sell products 
under the Radio Shack name west of the Mississippi River, an area 
where Radio Shack had mail order sales at the time of some $4 million 
annually. Under the terms of the agreement, Radio Shack was required 
to furnish merchandise to Tandy at prices approved by the First Nation- 
al Bank of Boston. 

In a news release announcing the franchise agreement, Tandy report- 
ed it would open four Tandy electronics stores within 60 days in Texas' 
four largest cities, Houston, Dallas, San Antonio and Fort Worth, "to 
supply the 'do-it-yourself hobbyist' with electronics equipment." The 
Wall Street Journal quoted a Tandy spokesman as saying, "This will be 
Tandy's major entry into the radio and hi-fi hobby market." 

The announcement left Wall Street singularly unimpressed. Tandy 
stock, which had sold at a high of \VA only a few months before, 



154 CONFRONTATION AT THE WALDORF 

sank to a depressingly low 5V% by early June. On June 10, 1963, 
Shearson, Hammill & Company carried a report on Tandy that de- 
clared: "There seems to be no apparent reason to account for the cur- 
rent weakness in this stock other than the fact that with its thin market, 
any sizeable selling activity is likely to have a disproportionately de- 
pressing effect on the price. In addition, the company's third quarter 
report, which was published at the end of April, was somewhat 
disappointing. Even though 9-month per share earnings advanced to 57 
cents per share from 54 cents in the comparable year earlier period, this 
gain was due entirely to a recapitalization effected during the third 
quarter which reduced the number of shares outstanding from 
1,566,661 shares to 1,060,938 shares." (The 500,123 shares were ex- 
changed for $3.5 million of 6/2 percent debentures due January 1, 
1978.) 

The Shearson report continued: "However, we understand that the 
fourth quarter should be quite good. Both sales and earnings are be- 
lieved to have shown good gains in April and May and with a large 
portion of the expenses which depressed third quarter earnings out of 
the way, profits for the full fiscal year ending June 30, 1963, are likely 
to amount to around 70 cents per share or even slightly better. This 
would compare with 63 cents per share reported last year on the larger 
number of shares outstanding." (Tandy's actual fiscal 1963 earnings 
turned out to be 67 cents per share.) 

"It is also worth mentioning," the Shearson commentary added, "that 
Tandy has an option to buy the controlling interest in Radio Shack 
Corp., an important distributor of electronic parts and hi-fi components. 
This New England-based company was facing financial difficulties 
when Charles D. Tandy assumed its management last April, but is now 
making progress and could be in the black by the end of the 1963 cal- 
endar year. The decision whether or not to exercise the option for the 
Radio Shack interest will be made after the end of both companies' fis- 
cal year on June 30." 

This was the challenge that Tandy faced. 

On September 13, 1963, he transported his entire board of directors 
to Boston for a special meeting, where he secured approval for the con- 
version of the original $300,000 loan to Radio Shack into 300,000 
shares of Radio Shack stock and for the exercise of options to acquire 
359,000 shares of Radio Shack common stock from the Deutschmann 
family and 240,000 shares from Radio Shack Corporation. This gave 
Tandy control of Radio Shack. 



CONFRONTATION AT THE WALDORF 155 

In addition, the board approved an option for Tandy to acquire an ad- 
ditional 1,000,000 shares of Radio Shack common stock at a price of 
$1 per share over a period of five years, with the proviso that any funds 
paid by Tandy to Radio Shack from the exercise of the option be used 
to reduce Radio Shack's bank loans. 

On November 12, Tandy convened a special meeting of Radio Shack 
shareholders in Boston, at which formal approval was given to the fi- 
nancial reorganization of the company. Shareholders also elected a slate 
of Tandy-backed candidates to the Radio Shack board. The new direc- 
tors were Charles Tandy, Luther Henderson, Carl Welhausen, Jim 
West, Hooks Burr, Alfred H. Hauser, and Richard Barth, a Boston at- 
torney. Burr was the only holdover from the previous board. 

As part of the reorganization plan approved by the Radio Shack 
shareholders, State Mutual Life Assurance Company exchanged its $2 
million senior note for 100,000 shares of Radio Shack senior convert- 
ible participating preferred stock, which was convertible into common 
stock on the basis of five shares of common for each share of preferred. 
State Mutual also agreed to purchase for $300,000 a new issue of 
30,000 shares of Radio Shack junior participating convertible preferred 
stock, which was convertible into ten shares of common stock for each 
share of junior preferred. State Mutual also was granted an option to 
sell the 100,000 shares of senior preferred stock and the 30,000 shares 
of junior preferred stock to Tandy for $500,000 in cash or Tandy stock 
or a combination of both. 

The stage was set for a classic confrontation between Charles Tandy 
and his board on the afternoon of November 15, 1963, in Tandy's suite 
at the Waldorf-Astoria Hotel in New York. 

Tandy needed board action ratifying the Radio Shack reorganization 
plan and the option agreement with State Mutual Life Assurance Com- 
pany. He placed both items on the agenda of the board meeting that fol- 
lowed the day after the annual meeting. Although he was aware of the 
board's concerns over the Radio Shack venture, he was totally unpre- 
pared for the near revolt that erupted at the board meeting. 

Luther Henderson reviewed where they stood just before the fateful 
meeting. 

"We had now gotten the Cost Plus import store group going, which 
was capable of using up a lot of money. We had Charles personally and 
directly involved in Radio Shack which also needed money. We had the 
Tex Tan Welhausen operations down at Yoakum, American Handi- 
crafts Company and Tandy Leather Company. In effect, Charles was 



156 CONFRONTATION AT THE WALDORF 

running the Tandy Leather Company, Radio Shack and the general cor- 
poration all at the same time. 

"By this time, we had also gotten acquainted with the internal opera- 
tions of Radio Shack and realized it was going to require a tremendous 
amount of work to get it straightened out and earning the kind of profits 
we wanted. And Charles had expressed his determination to personally 
run the Radio Shack Division, as I was then running the import store 
division and Carl Welhausen the Tex Tan Welhausen operation. 

"During this period, a concern had developed among all of the other 
directors as to whether Charles was overextending himself to take on 
this commitment to personally run Radio Shack, plus the rest of the 
company which was not in bad shape but needed leadership. So several 
of the directors came up with the idea that, for a limited period, one or 
two years, that Carl Welhausen become the president of the corporation 
and that Charles be the president of the Radio Shack Division. Charles 
wouldn't exactly be under Mr. Welhausen, but Charles' attention would 
be wholly on Radio Shack. 

"This idea was presented to Charles by me on the day of the board 
meeting in New York. This was not particularly my idea, but I was 
asked to be the spokesman for the other directors. I got elected, I would 
guess, because I was Charles' oldest friend on the board. Needless to 
say, Charles didn't like the idea and let me know how he felt in very 
blunt terms. He was very upset, so much so that I felt our entire rela- 
tionship was in real jeopardy." 

Henderson, who epitomizes the words, "laid back," and is the embod- 
iment of understated candor, shook his head and smiled ruefully as he 
recalled Tandy's reaction to his proposal. 

Bill Michero, who was present in Tandy's suite at the Waldorf in his 
capacity as corporate secretary, remembered that the annual meeting in 
Flemington, New Jersey, the day before had been "perfunctory", and 
that afterwards all of the directors, except for Tandy, got together for 
dinner at a steak house on Third Avenue in mid-town Manhattan. 

"The Radio Shack thing got a lot of discussion that night, most of it 
negative," Michero said. "So, at the board meeting the next day, when it 
came up that this was going to call for 'x' dollars and it was going to 
call for all of Charles' time, that's when the fireworks began." 

The motive of the board, Michero insisted, "was that it just didn't 
want Charles to get lost or to wander off, because things still needed to 
be done at the Tandy organization. That was the primary objection. 



CONFRONTATION AT THE WALDORF 157 

There might have been a couple of abstainers on the board, or a couple 
of guys who would keep their mouths shut, but the general mood of the 
board was negative, against it." 

Charles Tandy, as chairman, opened the board meeting with a report 
that, "In accordance with the terms of the option agreements with cer- 
tain individuals, a total of 355,881 common shares of Radio Shack 
Corp. were delivered to the company on November 8, 1963. These 
shares represent 50.15% of the common stock outstanding, and due to 
the evaluation formula contained in the option agreements, no consider- 
ation was payable by the company for the shares." 

Tandy called for board approval of the option agreement with State 
Mutual Life Assurance Company, under which 130,000 shares of Radio 
Shack preferred stock would be acquired at a price of $500,000, pay- 
able in cash or stock, or a combination of both. This led to a heated dis- 
cussion over the merits of the Radio Shack acquisition and of Tandy's 
resolve to run Radio Shack, Tandy Leather Company, and Tandy Cor- 
poration simultaneously. It now became apparent to everyone in the 
room that a do-or-die point had been reached. 

"It was a very dramatic moment," Michero recalled. "I remember 
quite distinctly at that point that Charles was leaning against the mantle 
of the fireplace in the suite, and he made it very clear that if the board 
did not approve of his further pursuit of Radio Shack, he would resign 
from the board and take the deal on personally. Then he exited the 
room." 

Tandy's dramatic departure stunned the board. The tension in the ho- 
tel suite was like that agonizing moment in a "sudden death" football 
game when the ball is placed on the turf for a winning field goal at- 
tempt, or the heart-palpitating moment in a murder trial when the fore- 
man of the jury rises to announce the verdict. 

The directors followed Tandy out of the room with their eyes. Then 
the reality of what was happening took hold. This was not a group ac- 
customed to internecine warfare or to standing up to Tandy 

The board backed off. 

"It took a few minutes of muddling and fumbling and grumbling," 
Michero said, "but there was no longer any doubt that Charles was go- 
ing to get everything he wanted." 

"We all realized," Henderson concurred, "that the company's being 
carried to this point was largely on the momentum of Charles' own per- 
sonal drive and strengths and that he was the largest shareholder in the 



158 CONFRONTATION AT THE WALDORF 

company by a large margin. The feeling was that if he thought that he 
could do it, we owed it to him to support him. So we approved the deal 
on his terms." 

The minutes of the historic meeting, written by Michero, simply stat- 
ed, "Following a discussion of the Radio Shack reorganization and the 
plans of management for the operation of Radio Shack, and upon mo- 
tion by Mr. Henderson, seconded by Mr. Dempsey, and unanimously 
approved, it was 

"RESOLVED: That the actions of the officers of the company in 
entering an agreement with State Mutual Life Assurance Company 
of America which, among other things, provides State Mutual the 
option to sell to Tandy Corporation all of the 100,000 shares of Se- 
nior Convertible Participating Preferred and all of the 30,000 
shares of Junior Convertible Participating Preferred of Radio 
Shack Corporation held by State Mutual for a consideration of 
$500,000 in cash or Tandy Corporation common stock, or a com- 
bination of both, be and hereby are confirmed and ratified. 
"There followed a discussion of the operating affairs of Radio Shack 
Corporation and of the program of its management to achieve satisfac- 
tory profitability and expansion objectives. 

"There being no further business to come before the meeting, and on 
motion duly made, seconded, and carried, the meeting was adjourned at 
4:30 p.m." 

Tandy had gotten his mandate. He could now proceed with chasing 
his dream. 



Chapter 11 
A Vision of 1,000 Radio Shacks 



Even before securing his grudging go-ahead from his board of direc- 
tors, Tandy began opening new Radio Shack stores. The first additions 
were in New England, where they could be easily served from the Bos- 
ton warehouse. These were merely the opening trickle of what would 
become a flood. 

In his initial meeting with his new team after taking over the Radio 
Shack reins, Tandy had asserted, "We're going to put stores wherever 
the mail orders are coming from." The Radio Shack mailing list was to 
be the key to the first stage of the expansion effort. 

"Charles recognized that our mail orders by themselves were generat- 
ing poor business, but he simultaneously realized that in our mailing 
list we had the tool to tell us where to open new stores," Dave Becker- 
man said. 

"He studied the mailing list and came up with a breakdown by state 
and then a breakdown by city as to where our customers were, and 
that's where we put in our first retail stores. Our expansion was concen- 
trated initially in the New England area because we could service that 
region easily from our Boston warehouse. But we also quickly opened 
stores in California, in the San Francisco and Los Angeles areas, and in 
Texas, where we had good clusters of customers." 

The first new outlets in Texas were located in Fort Worth, Dallas, 
Houston, San Antonio, and Waco; in New England in Brookline, Cam- 
bridge, Framingham, Lowell, Springfield, and Worcester, Massachu- 
setts; Manchester, New Hampshire; East Providence, Rhode Island; and 
Portland, Maine; and in California in Bakersfield, Downey, La Mesa, 
Long Beach, and San Leandro. These were swiftly followed by new 
store openings in New York City, Chicago, Philadelphia, Cincinnati, St. 
Paul, Seattle, and Arlington, Virginia. In addition, five electronics sup- 

159 



160 A VISION OF 1,000 RADIO SHACKS 

ply stores operated by Tandy in California and Texas were sold to 
Radio Shack in March 1964 and eight unprofitable Tandy Leather 
Company stores were converted into Radio Shacks. 

"I gave the Tandy Leather store managers a 30-minute course in how 
to sell electronics and turned them loose," Tandy quipped. 

To those on the scene at the time, the start of the store expansion pro- 
gram appeared to be more of a "seat of the pants" proposition than a 
meticulously thought out undertaking. "The first plan was for 30 
stores," Lew Kornfeld recalled. "The plan was also a little slapdash," 
he added. "I can remember Tandy sending Dave Beckerman out west 
from Boston to open stores in places like Cincinnati and Louisville 
without much thought as to the supply lines. But the second or third 
wave of thinking was that in order to take on an area, you had to have 
enough stores to support a warehouse; or, vice versa, have a warehouse 
to support the stores. 

"I can't remember the exact order of openings, but I know we had a 
giant leap to California, and we soon discovered that the lack of a ware- 
house, the lack of fast replenishment of stock, and the cost of advertis- 
ing were way out of line when you had only a few stores. If you have 
one store in San Francisco, it costs you 100 percent to advertise. If you 
have 10 stores, it only costs each store 10 percent. So that became part 
of the strategy. Eventually, the thinking was crystallized as to how 
many stores we could have per head of population, regardless of the 
age, color or sex of the people living there." 

Between June 30, 1963 and June 30, 1964, Radio Shack opened or 
acquired 27 stores, bringing the total number of outlets to 37 at the 
1964 fiscal year-end. 

"The stores that we opened were 2,500 square feet," Bernie Appel re- 
ported, "just about the same size as they are today. We're just paying 
higher rents today. We didn't go into the higher-class malls in those 
days. In the beginning, we made some mistakes going into low-rent, 
out-of-the-way places. When we were parts and pieces people, that's 
where vou had to be. But when Charles realized we could sell end 



the numbers." 

Appel said that Tandy was far ahead of his time in anticipating the 
explosive growth of consumer electronics and that he backed up this 
belief by opening stores when the business was still losing money. 



A VISION OF 1,000 RADIO SHACKS 161 

"If we go back and look at the consumer electronics industry in the 
early 1960s," Appel pointed out, "there was none. It was a nothing 
business. We grew with the industry as the predominant supplier of 
components and accessories, and at the same time did a reasonably 
good job on inventory, on finished hi-fi, radios, and tape recorders. It 
was Charles' genius that enabled him to see the potential in consumer 
electronics, even though it's the thing he's given the least credit for. He 
recognized that the consumer electronics business was absolutely the 
future business of this nation. He saw things before anyone else real- 
ized them. Keep in mind that before he came to Radio Shack, he had 
visited all of the electronics specialists. When he tried to buy Allied and 
Lafayette, they laughed at him. They told him he was crazy. But once 
the ball started to roll, nobody could catch us. 

"Charles knew that the leather business was limited to a small per- 
centage of the population doing leathercrafts," Appel said, "and some- 
how he just knew that consumer electronics would become a big, big 
business. Initially, he recognized the hobbyist parts and pieces of the 
electronics business more than he did the finished equipment, as we 
know it today; but he was quick to seize on that, too, when it became 
apparent that that was where the bucks were. 

"What we have to realize is what has happened to the electronics in- 
dustry since Charles got into it. Factory sales in 1963, the year Tandy 
bought Radio Shack, were only $2.6 billion. He saw it at the very, very 
beginning. In 1990, consumer electronics was a $34 billion industry. 
Charles had the vision to see that coming." 

One of Tandy's first priorities after taking over the Radio Shack helm 
was to tackle the problem of the $7 million in revolving credit that the 
previous management had accumulated under its policy of selling mail 
order merchandise for nothing down and monthly payments as low as 
$5. To salvage what he could of the credit disaster, he put hundreds of 
collection agencies and law firms to work. 

"Of the $7 million that was on the books at that time," he later re- 
called, "we collected all but about $2/2 million, but at a tremendous 
cost." 

Another priority was to clamp a lid on Radio Shack's free-spending 
proclivities. For this assignment, he dipped into the ranks of his long- 
time associates and plucked Bill Vance out of an executive position 
with American Handicrafts. 



162 A VISION OF 1,000 RADIO SHACKS 

"My job was to control the money, sign all the checks, 59 Vance re- 
called. "Charles said to me, 'Don't allow a nickel to be spent without 
your okay. If there's anything those guys up there in Boston don't 
know, it's anything about money. They don't have any idea how to cre- 
ate a buck, earn a buck, or save a buck. That's where their problem 
is.'" 

"How much authority do I have over this money?" Vance asked. 

"Absolute," Tandy replied. 

"Does that include you? You're not going to come in and tell me to 
spend money on this and that?" 

"That's right," Tandy agreed, "but I would like to have the privilege, 
if I think we ought to do something, to sit down and discuss it with 
you." 

"I understand that," Vance came back. "I just want to make sure 
you're not going to come in and tell me we're going to buy this or 
we're going to buy that. If you want this money controlled, I'll control 
it" 

There was a great deal of room for belt-tightening at Radio Shack 
headquarters. 

"The boys up in Boston were pretty free with the company money," 
he disclosed. "After I looked it over, I told Charles that I was going to 
cut this out and that out and that there were going to be some com- 
plaints up there among some of the people he considered important." 

Tandy's response was, "They're not important unless they learn how 
to use money. Go ahead and do what you have to do." 

For 13 months, while on this special assignment, Vance controlled 
the Radio Shack purse strings. 

"I cut some general things," he reported. "They did things like once a 
week or every two weeks, they'd have an executive group that would 
go out to one of the nice restaurants in Boston and they'd have them- 
selves some drinks and a nice dinner. Supposedly it was a business 
meeting. Those meals would run from $350 to $450. 1 didn't know they 
were doing that until I got the first bill. So I sent it back and told them 

il 1 _ •> i .. .. , _ ... j. t.t. !- _ 1 r/! i .. _ 1 - . !„ _ „. _. A IT 

uiK, vuiiipajuy uv/c-oii t avwvpi tmo aa a x^j^itiixiatu uuoni^ija wvp^iiov. rxuu. x 

told them, Tf you want to meet, meet in your offices. We can't spend 
money this way. We don't have it to spend. We're not being tight- 
fisted, it's a matter of making what money we have go round." 

Some months after starting his duties, Charles asked Vance, "Based 
upon what we've done with Tandy Leather, what would your guess be 



A VISION OF 1,000 RADIO SHACKS 163 

as to the number of Radio Shack stores we can put in across the 
country?" 

Vance guessed, "Maybe 200 or 300 stores and, ultimately, maybe 
500." 

Tandy pondered that, then wondered aloud, "Do you think we can put 
in at least 50 profitable stores?" 

Vance answered, "I certainly think so. But we've got to learn how to 
sell. We have to run some bigger ads." 

The small, 2»by»4»inch newspaper ads Radio Shack was running, 
Vance said, weren't paying for themselves. "We didn't seem to pull 
enough business from our newspaper ads, at least the size ads we could 
afford. I did a 2,000-customer survey to see what I could find out about 
customer habits. We got a 22 percent reply. At the time, seven or eight 
percent was considered good. The survey showed that the thing that 
seemed to be our best possibility for pulling in more people was to run 
bigger ads, a full page or even a half page. Obviously, there were mil- 
lions of people interested in electronics and, obviously, electronics was 
going to keep on growing and get better all the time. But how do you 
survive in the meantime? It seemed to me our survey said, 'Go ahead 
and run larger ads in the paper and develop a good catalog.'" 

Tandy didn't have to be convinced about the necessity for spending 
advertising dollars. He and Lew Kornfeld had come to a quick agree- 
ment on that subject right after Charles' arrival in Boston. Kornfeld re- 
called the conversation: 

"Lew, how much do you think our ad budget ought to be?" 

"Six percent of sales is what I think." 

"I can live with that." 

Kornfeld, who would see Radio Shack's ad budget soar to $140 mil- 
lion in 1981, the year he retired, retained fond memories of Tandy's 
commitment to advertising. "He was holding court one day with a 
group of Radio Shack executives. Everyone was complaining about soft 
sales. The business is out there,' Tandy said, glaring at the assemblage. 
'Let's up the ad budget.'" 

Another early decision Tandy made was to continue two Radio Shack 
publications, the catalog and the monthly flyer, but to discontinue mail- 
ing them to purchased lists of names. Soon after that, he ordered the 
discontinuance of mail order solicitations. 

"The paradox," Kornfeld pointed out, "was that Radio Shack in- 
creased its mailings at the same time it stopped doing business by mail. 



164 A VISION OF 1,000 RADIO SHACKS 

But first and by far the most important thing we did when we opened 
the new stores and brought in the customers was that we captured their 
vital statistics on oxxr sales slips. This gave us access to customers who 
might, who could, and who absolutely and trackably did become repeat- 
ers. When Radio Shack made its store personnel keenly aware of the 
importance of each customer's curriculum vitae, the names of their re- 
cent customers really started pouring into our computer center in Bos- 
ton, and the advertising people really started pouring out the mail." 

Tandy credited the "massive use of advertising" as a major factor in 
Radio Shack's success. 

"At the time I took over Radio Shack," he recalled in a talk at the 
Massachusetts Institute of Technology in 1978, "they were spending 
about five or six percent on advertising. Now, in a $10 million business, 
you can see that's about half a million dollars. This year, Radio Shack's 
expenditure for advertising will be in excess of $90 million. If you say 
it real fast, it doesn't hurt. But every piece of it has been measured. We 
measure what a television commercial brings us. We measure what a 
newspaper ad does. We'll follow a system and a habit if one works. 
Every year, in August, you'll find us with a big, massive display of TV 
antennas. We start manufacturing in January, getting ready for a sale in 
September, the last of August." 

Tandy paused, then asked, "Why antennas? Why TV antennas in Au- 
gust, the first of September? Anybody got an idea? Well, you hit it. The 
men like to see a good football game. (Chuckle.) And we've got to get 
there a little ahead of the time, don't we? So we've got to give you a 
good price and a good reason to get up there on that roof to fix that an- 
tenna. So why does that work? Common sense. That's all it adds up to. 
And we've been doing that for five years. You'd think somebody else 
would follow us. You'd have thought somebody would have copied 
Radio Shack. I was afraid that they would for the first five or six years, 
and I was running like hell." 

He was, indeed, running like hell during the period he was commut- 
ing regularly between Fort Worth and Boston. 

Ke was a hard wurkci," Dave Bcckciiiiaii auc&tcu. " wncii ixc was hi 
Boston, he stayed at the Ritz-Carlton or the Sheraton, and we'd pick 
him up for breakfast in the morning. He took over Deutschmann's old 
office. It was a large office with a conference table. I'd usually pick 
him up. He often had a guy with him from Fort Worth, a Harvard Busi- 



A VISION OF 1,000 RADIO SHACKS 165 

ness School graduate named Gerald Rolph, who was brought in to han- 
dle the collection of the revolving credit money and to dissolve the 
revolving credit unit." 

The hard work and the new programs began paying dividends in in- 
creased recognition on Wall Street. 

On March 17, 1964, Boenning & Co., a New York brokerage house, 
published an in-depth report on Tandy Corporation, describing it as 
"the nation's largest manufacturer and retailer of a diversified line of 
handicraft supplies, educational, do-it-yourself and occupational ther- 
apy products, with 179 retail stores in 43 states and Canada, plus a mail 
order business." The report then added: 

The recent sharp increase in the price of Radio Shack Corp. 
common stock from 3 / 4 to VA wasn't reflected in the price of 
the common stock of Tandy Corp., which holds as its principal in- 
vestment 893,568 shares (71 percent) of Radio Shack common at a 
cost of $305,000. This complete lack of recognition leads us to be- 
lieve even more strongly that Tandy common is an undervalued 
situation. The last time Tandy Corp. was written up was in early 
1962. At that time, the company was to earn about 60 cents (with 
the benefit of a tax loss) and the stock sold as high as ll 7 /s. 
Now the company is estimated to earn 75 cents to 85 cents in the 
year ending June 30, 1964, and the stock sells at 6/2. In the 
meantime, a potentially explosive investment, Radio Shack, has 
been added to the company's assets. 

The company has decreased its capitalization and increased po- 
tential dilution by issuing warrants and leaving the convertible 
American Hide & Leather 5% Income Debentures outstanding. It 
is also true that there is no current dividend on the common stock. 
These are the two major negative factors in the Tandy picture. 
Now let's look at the plus factors. 

1. Sales of Tandy Corp. have continued to grow quite rapidly. 
So has the number of stores. The expense of rapid store expansion 
has penalized earnings. Experiments in types of stores, locations, 
etc. have been undertaken. Some were successful and, naturally, 
some areas unsuccessful and costly. The period of rapid store ex- 
pansion and experimentation appears over. The time to reap the 
benefits has arrived. In the first six months, operating income was 
up 20.6 percent, commensurate to the sales increase of 20 percent. 



166 A VISION OF 1,000 RADIO SHACKS 

This is the first indication of increased profitability in the past two 
years. Sales during that period rose, but profits lagged well behind 
because of expansion and experimentation costs. 

2. When Charles Tandy undertook the reorganization of Radio 
Shack in April 1963, Radio Shack had 9 stores. Today there are 23 
stores in the chain. When Radio Shack was taken over, there was 
complete chaos. A seemingly impossible task of reorganizing the 
company was laid out. The concept of the business was analyzed 
with regard to margins, turnover of inventory and costs. As a re- 
sult, drastic changes in inventory control were installed. The give 
away of the no-money-down-revolving-charge-plan was changed 
to a policy of down payments. Unrelated lines were liquidated. In- 
ventories were reduced by almost $2,000,000. Gross margins were 
analyzed and unprofitable lines eliminated. As a result, a gross 
margin of 3 1 percent, based on actual physical inventories, was in- 
dicated in the six-month report for the period ended December 31, 
1963. Sales were off, but a profit from operations was indicated. 
This was offset by unusual charge-offs for revolving credit and in- 
terest. A financial reorganization was effected which gives Radio 
Shack $4,500,000 long-term credit at very reasonable rates, plus 
an additional line of $1,000,000 for seasonal needs. This financial 
structure should be adequate for near-term needs. 

3. The low price-earnings ratio of 8/2 times on a growth com- 
pany is unusual, I believe. Our guess is that Tandy is still relative- 
ly unknown, even though listed on the New York Stock Exchange, 
and certainly not recognized as a growth company. In going from 
obscurity to recognition, price-earnings ratios change. This could 
account for more immediate price appreciation than earnings in- 
creases. In the case of Tandy Corp. common, there appears to be 
plenty of room for both. 

4. Standard & Poor's recent stock report on Tandy points out 
tne substantial unution prospects, x Aiis wouiu scare one away i± 
one couldn't see an even greater offsetting factor that doesn't even 
show in the income account, i.e., Tanu^y & investment in ivauiu 

Shack. Each share of Tandy has approximately .83 of a share of 
Radio Shack behind it. Radio Shack, at 1/2, amounts to $1.25 
per share of Tandy. 



A VISION OF 1,000 RADIO SHACKS 167 

5. Tandy Corp. sales have increased from $15 million in 1961 
to an estimated $23 million this year. Earnings have increased 
from 46 cents (mostly non-taxable) to an estimated 75 cents to 85 
cents for this year ended June 30, 1964. The price of Tandy com- 
mon stock was 6 5 /sback in 1961. Today it is 6/2! The price- 
earnings ratio is, among other things, dependent upon confidence 
in management's ability to make profits with fair consistency and 
the quality and amount of promotion given their stock. There has 
been an almost complete absence of promotional work done on 
this stock in the past nine months. This is partly due to top man- 
agement's preoccupation with the reorganization of Radio Shack. 
Another factor was possible financing hanging over Radio Shack 
and the reluctance of management to make statements which 
might snarl the underwriting procedure. With the Radio Shack pic- 
ture stabilized, the proposed financing indefinitely postponed and 
current results of the main Tandy Leather Division increasing sat- 
isfactorily, along with the profitable Tex Tan Division, we expect 
seeing this 'hands-off policy reevaluated. 

6. Over the past VA years of seeming inactivity in the common 
stock of Tandy Corp., the stock has built an interesting point-and- 
figure pattern on the one-half point chart. The reading of the chart 
indicates an upside objective of $16. 

As bullish as the Boenning & Co. report appeared, there was no im- 
mediate impact. Three months later, when nine-month earnings of 63 
cents per share on sales of $18.3 million were reported, Tandy stock 
was still languishing at around $7 per share. 

The stock was trading at 6V* on June 10, 1964, when Shearson, 
Hammill, another New York brokerage house, labeled it an "attractive 
low-priced speculation." The report added, "Radio Shack's operations 
have been turned around sharply and have been in the black since the 
early part of 1964. For fiscal 1964, Radio Shack will just about break 
even, compared with a loss of $4.2 million in fiscal 1963." 

The report concluded: "The recent market performance of Tandy's 
common stock has been unexciting to say the least, and the shares have 
stayed in their present narrow trading range for well over a year, even 
though the company's per share earnings have continued to improve 
slowly but steadily. Currently selling at around 9 times estimated fiscal 



168 A VISION OF 1,000 RADIO SHACKS 

1 964 results of 75 cents per share on sales of $24 million and at less 
than 8 times our projection of fiscal 1965 earnings of around 90 cents a 
share on sales in the area of $27 million, Tandy appears to have a good 
deal of speculative attraction, based on our expectation that the compa- 
ny's growth is likely to be recognized by the market before too long." 

As it turned out, Tandy's actual fiscal 1964 earnings of 89 cents sub- 
stantially surpassed the optimistic Shearson, Hammill forecast of 75 
cents and represented an increase of 33 percent over the prior year's 67 
cents. Sales rose 17 percent to $23.8 million. 

Tandy proclaimed the 1964 results in an advertisement on the busi- 
ness page of the Fort Worth Star-Telegram under a headline that an- 
nounced: "Fourth Consecutive Growth Year Recorded by Tandy 
Corporation." 

Apparently Charles was no longer averse to touting his stock. 

Tandy Leather again had been the largest contributor to corporate 
earnings in fiscal 1964. With its 115 company-owned retail and mail 
order stores and a mail order customer list that included 30,000 institu- 
tions and 250,000 individuals, it was the fount from which all blessings 
flowed. By comparison, Radio Shack had experienced a net loss of 
$323,238 in its 1964 fiscal year. 

"Let's face it," Lew Kornfeld said candidly, "Radio Shack was the 
dregs. Tandy Leather was the cash cow. When I would come to Fort 
Worth from Boston, I could actually feel the hostility of people who 
saw Radio Shack draining off corporate profits." 

Phil North, who by this time was a large Tandy Corporation stock- 
holder and confidante of Charles Tandy's, remembered Jim West com- 
plaining over how Radio Shack was eating up the profits generated by 
Tandy Leather Company. 

"He'd take me aside at every possible moment and say, 'Phil, Radio 
Shack is eating our money. It's a money-eater. I'll tell you, Phil, you 
and I will not live to see the day that Radio Shack will make a nickel' 
He'd shake his finger under my nose and say, 'Mark my words, Phil, 

Shack with a great deal ot skepticism, even alter it turned me corner, i 
think that even after he recognized that Radio Shack was going to be- 
come a great success, it was part of his character to say it would never 
amount to anything." 



A VISION OF 1,000 RADIO SHACKS 169 

Recalling that era, Eunice West said, "Of course, you have to keep in 
mind that Jim started out in the leather business, and it was always his 
first love. But, you know, you have to prosper and go along. So after 
Charles got into Radio Shack, Jim went along with it even though he 
had opposed it at first. But they were a good pair together. Charles was 
the dreamer and Jim was the fulfiller." 

After Dave Tandy's retirement as president of Tandy Leather Com- 
pany in 1956, Jim West took over sole responsibility for trying to keep 
a rein on Charles' high-flying aspirations. 

"Charles always wanted to do big things, and Mr. Dave worried about 
that," Mrs. West related. "You know, just before Mr. Dave died in 
1966, Jim and I visited him in All Saints Hospital. Just before we left, 
Mr. Dave took Jim's hand and he said, 'Now, West, you must try to 
control Charles. You know he'll go wild. I want you to control him. 
You always helped me do it. Now you'll have to do it by yourself.' 

"Jim and Charles were like father and son," Mrs. West went on. "And 
Jim was good with Charles. He could control him most of the time, but 
it wasn't easy. They had tremendous arguments. You'd think they never 
were going to speak to one another again. Then, when it was all over 
with, why, they'd shake hands and just laugh and be the best of friends. 
They could throw it off." 

She laughed as she recalled an incident that took place late one night 
in the Tandy headquarters on West 7th Street. 

"Charles wanted to make a deal of some kind and Jim didn't want 
him to do it, Jim had a tremendous temper. He'd get so angry. But he'd 
say what he wanted and then it was all over with. This night, several of 
the men were still there, including John Wilson, and they said that Jim 
kept arguing with Charles, and Jim finally said, 'Look, you're going to 
listen to me or else...' And he pushed Charles up against the wall and 
began shaking him, beating his head against the wall. Charles just 
looked at him, and when Jim turned loose of him, Charles just slumped 
down. Jim had made a believer out of him. After it was over, they were 
the best of friends again. Jim came home that night and never said a 
word to me about it. I heard it from the fellows. They said it was very 
funny, in a way, because Charles was so much bigger than Jim. And 
here was Jim just shaking him like he was a doll. Charles just put up 
with it." 



170 A VISION OF 1,000 RADIO SHACKS 

Tnhn Wilson HismiteH the cotitention that there were hard feelines to- 
wards the Radio Shack group on the part of the old-timers in Fort 
Worth. 

"We had no resentment over the fact that Tandy Leather was financ- 
ing the early days of Radio Shack," Wilson asserted. "We knew that if 
we were going to become a nationally-recognized corporation, we 
damn sure weren't going to do it in leathercraft. All of us were substan- 
tial shareholders in Tandy Corporation. It was to our advantage in the 
long run to make Radio Shack go. Charles went into Radio Shack be- 
cause he knew the potential of Tandy Leather was limited and that in 
order to become really big he had to find another vehicle. The way we 
were running Tandy Leather was actually the proper way. We were 
making money every year. It had a tremendous return on investment 
and on equity. But the growth was really limited. 

"We ran many surveys that showed that only 2 or 3 percent of the 
people were interested in doing leathercraft. That obviously was not a 
situation you wanted to hitch up to to get anywhere in the corporate 
world. I recall having many conversations with Charles where he said 
we needed to find another vehicle. We would have discussions on 
where we were going to take Tandy Leather. We would have meetings 
on how big a gain we were going to have this year and next year. I 
hadn't been in Fort Worth too long, when at one of the meetings I 
talked about 10 and 20 percent gains, and Charles shook his head and 
said, 'John, that's not in the cards. We've got to get into something 
that's got some real growth potential'. We'd been having 2 or 3 percent 
gains." 

Jim West's opposition to the Radio Shack venture was beginning to 
abate as the 1964 fiscal year ended, although he continued to express 
concerns about the financing of the Radio Shack expansion program. 
He was frequently heard muttering in Charles' earshot about the folly 
of "robbing Peter to pay Paul." 

Tandy would usually pretend he hadn't heard him. Other times, he'd 

iOOK Up <XTi\l giin ailG glVC VVCol iiVC <^nuiUiiiiUUii V XUi v iwiuij si^n. 

Sometimes, he'd merely raise his middle finger. 

Nevertheless, in September of 1964, Tandy showed his affection and 
esteem for his long time mentor by naming West to succeed him as 
president of Tandy Corporation, with Tandy assuming the title of chair- 
man of the board. West, who had been serving as president of the 



A VISION OF 1,000 RADIO SHACKS 171 

Tandy Leather Company Division, was succeeded in that position by 
Harlan Swain. John Wilson was named a Tandy Leather Company vice 
president. 

Tandy stock was now beginning to move. On October 20, it hit a 52- 
week high of IO/2, and a financial wire service messaged its clients, 
"Tandy is another low-priced recommendation of not too many weeks 
ago that broke through on increased volume yesterday and reached a 
new high. Here we see the trend to near 12, and as it nears that figure, 
we would then consider accepting short term gains." 

At the same time, Vanden Broeck Lieber, a New York Stock Ex- 
change firm, advised its clients that Tandy, "at some 9 times prospec- 
tive earnings," appeared to be "an attractive speculative commitment in 
an interesting corporate rehabilitation situation." 

On November 30, 1964, Tandy moved to reduce indebtedness and 
stabilize the shareholder dilution factor represented by its 5 percent 
convertible subordinate non-cumulative income debentures due October 
1, 1975, by calling the debentures. This resulted in the issuance of 
96,325 shares of common stock at the conversion rate of one share of 
stock for each $10 principal amount of debentures. The redemption was 
funded through the sale of $1.1 million of 5 percent senior convertible 
notes due in 1975 to State Mutual Life Assurance Company of Worces- 
ter, Massachusetts. At the same time, Tandy secured further financing 
for his Radio Shack expansion program by negotiating long-term loan 
agreements totaling $3 million with State Mutual Life and the First Na- 
tional Bank of Boston. 

Also in late November 1964, Tandy exchanged 96,000 shares of its 
common stock for 130,000 shares of Radio Shack senior and junior 
convertible preferred stock held by State Mutual Life. The preferred 
stock would later be converted into 800,000 shares of Radio Shack 
common stock, increasing Tandy's ownership in Radio Shack to 85 
percent. 

The dilution caused by the issuance of the 192,325 shares had little 
immediate effect on Tandy earnings, which nearly doubled from 53 
cents per share to $1.04 per share for the first six months of the 1965 
fiscal year which ended on December 31, 1964. First half sales also 
rose sharply from $12.6 million to $22.7 million. 

"The excellent earnings increase of the past six months is the result 
of a 50 percent gain in profits of our Tandy divisions, plus a large earn- 



172 A VISION OF 1,000 RADIO SHACKS 

ings contribution from the recently-consolidated subsidiary, Radio 
Shack Corporation," Jim West crowed in a news release. "Sales contin- 
ue strong in all divisions, and plans call for further expansion of the re- 
tailing divisions during the coming months." 

On the strength of the improved earnings performance, Tandy stock 
had reached a new high of 13 at the end of the 1964 calendar year and 
was flirting with 14 when the company was invited to make a presenta- 
tion before the New York Society of Security Analysts on February 16, 
1965. The invitation had arrived while Charles was in London looking 
over marketing opportunities for Tandy products in England, but he cut 
short his European junket to avail himself of the opportunity of telling 
the Tandy story to this influential audience. 

In his opening remarks, Charles admitted he had been waging an up- 
hill battle in attempting to get across the real nature of the company. He 
pointed out, "It was only recently that one of the large and widely re- 
spected financial publications finally moved Tandy Corporation from a 
listing in the same category with Swift & Co. and Armour & Co. and 
placed us in the 'Retailing, Miscellaneous' category. And, a few years 
back," he continued, "Tandy's correspondent at the New York Stock 
Exchange was a specialist in the petroleum industry." 

Tandy then asked for a show of hands of all the parents in the audi- 
ence whose youngsters had ever attended a YMCA, YMHA, or Boy 
Scout camp or a similar youth program. A considerable number of 
hands shot up. "Thank you," he said. "If your youngster ever brought 
home a woven pot-holder, a pair of moccasins, or any other handicraft 
item which he personally made or put together, the chances are the ma- 
terials for the project came from one of our divisions." 

He drew a laugh when he added, "I believe it was comedian Phil Fos- 
ter who once remarked, 'I spent $500 to send my son to summer camp 
and all I have to show for it is a little round ash tray!' Well, the materi- 
als used to make that ash tray probably came from our company." 

Tandy drew some whistles from his audience when he said his goal 
moc; fr\ jyiirjjo oojpc r*ndl ?if;t income duritifi the next five vesrs. "^.Vhen I 
speaic or tripling our curreni saies and earnings per share during ihe 
next five years," he asserted, "I must hasten to point out that we have 
accomplished approximately that during the past five years." 

One reason for his optimism, he declared, was Radio Shack. 

"Having personally brought Radio Shack into Tandy Corporation, 
and having personally directed its operations for the past 21 months, I 



A VISION OF 1,000 RADIO SHACKS 173 

know Radio Shack's growth potential is greater than any of our other 
divisions. Its merchandise lines have a more universal market than 
the products of any of our other divisions. We are shooting for the 
opening of about 25 new Radio Shack stores during the next six 
months, and we have been carrying enlarged payrolls and overheads in 
preparation for this. 

"This is the time of year I like us to get set for fall. I don't like to 
wait until September to decide where to open stores. We've been open- 
ing stores in California, the Pacific Northwest, and heavily in the 
Southwest. We've got 43 stores now, with the new store opening costs 
being paid for out of current earnings. I honestly believe," he added, 
"that the country could support 1,000 Radio Shack stores." 

His statement was greeted by amused looks from some of the mem- 
bers of the audience. The very idea of a chain of 1,000 electronics 
stores sounded like another tall tale from Texas. 

Little did they know.... 



Chapter 12 

"When Are We Gonna Get Some 
Damn Stores Open?" 



Opening Radio Shack stores from scratch in brand new locales 
around the country took a lot of chutzpah. Chutzpah is a Yiddish collo- 
quialism for audacity and brass, which describes the very essence of 
Charles Tandy. Opening stores also took a lot of cash, which he had in 
less plentiful amounts. 

Most of all, opening stores required qualified people to run them, a 
commodity that Tandy lacked to an even greater extent than money. 

"It was a bit difficult to staff a company like Radio Shack that started 
with only nine stores," he recalled. "So I had to take people from the 
leathercraft division. In 1965, I had to take eight to ten of its best men 
and move them over to help me in Radio Shack." 

"The essence of the national expansion came from the old Tandy 
Leather group," Bill Michero said. "That was a very important factor, 
that we did have people, some really seasoned guys. We took them out 
of our old Tandy Leather Company and assigned them the task of open- 
ing new Radio Shack stores around the country." 

The recruitment of the Tandy Leather operatives was carried out in 
a hush-hush scenario that could have come out of the pages of a spy 
novel. Ken Gregson, then a Tandy Leather Company district manager 
in St. Louis, was one of the people mysteriously summoned to Fort 
Worth. 

"I'll never forget," Gregson recalled, "it was 1965, in the spring of 
the year. The call I received just told me to come to Fort Worth for a 
meeting on such and such a date. When I arrived, I found there was a 
group of about 12 of us, all Tandy Leather district managers, all staying 
at the same hotel where reservations had been made for us. You would 
have thought we all had the Black Plague. There was nobody to talk to. 
Our friends in the company were all out of town or couldn't be reached. 

175 



176 "WHEN ARE WE GONNA GET SOME DAMN STORES OPEN?" 

We'd call and get the information they weren't there. The wife would 
answer the phone and say he wasn't there. We were isolated from 
eveiybody in the company. A lot of crazy things went around in our 
minds as to what was going on." 

The nsxt morning, after an early breakfast at their hotel, Gregson and 
his Tandy Leather cohorts gathered in the conference room on the sec- 
ond floor of the Tandy Corporation headquarters on West 7th Street. 
Gregson described the scene. 

"We were all sitting around the table, waiting for something to hap- 
pen, when Charles and Jim West walked into the room. Jim then locked 
the door and gave the key to Charles. Charles put the key in his pocket, 
and he and Jim walked up to the head of the table and took their seats." 

Jim West rose to his feet. 

His opening words were, "I want you all to know that at one time I 
was called to Fort Worth from Houston, and when I walked into the 
room I was told that I was fired." 

He looked around the room and said, "You're all fired." 

Tandy stood up and explained that the men in the room were being 
asked to leave their jobs with Tandy Leather Company to help him 
build a national chain of Radio Shack stores. 

"He explained to us what we were headed for, what he wanted to 
build," Gregson said. "He told us that he wanted to expand the opera- 
tion and that he was getting a lot of static from the eastern people be- 
cause they didn't believe he was going to be able to expand like he said 
he wanted to. He told us that when he told them he wanted to have 100 
stores, they laughed at him. His statement to us was, T want some boys 
that are going to go out and put these stores together.'" 

In addition, Tandy reminded the men in the conference room, "You 
gentlemen are invested heavily in this corporation. The money that 
we've put into this thing has already gone down the sewer. We have to 
make this thing fly, because if we don't make it fly we're going to lose 
what we've got. There's a future here. The potential is here. It's what 

mis is me tmng or me nature, ur we can let it ran on us face. You boys 
are invested in the company. And if we don't make this fly, what 
you've got is gone. So let's get on with it." 

Tandy laid down the ground rules for the rest of the meeting. 

"First, I'm gonna outline what we're gonna do. Then you're gonna 
make your decision whether you're gonna do it or not. But, by God, 



"WHEN ARE WE GONNA GET SOME DAMN STORES OPEN?" 177 

you're gonna make the decision here and now. You're not going to call 
your wife or your sweetheart or your mother or your father or your 
banker or your lawyer. You wear the pants in the family. You make the 
decision, and after you've made it, well unlock the door. Now, if you 
decide that you don't want to do this, you go right on back to where 
you've been, and God love you. Go right ahead with the job you've 
been doing. But those who are gonna stay and do this with me are gon- 

The program was challenging. Each man who decided to participate 
would become the manager of a new Radio Shack store, which would 
be operated as a joint venture in which the store manager owned 50 
percent and the company 50 percent. Each store manager would have to 
put up $17,000, which would pay for the store's initial inventory. The 
company would back the lease, with each manager responsible for his 
own payroll. 

"Each of us was going to have go on the hook personally for the 
money," Gregson said. "No one had that kind of cash." 

It was a dramatic moment, as each of the 12 men in the room cau- 
cused with his conscience. There was no one to call on for guidance. A 
few closed their eyes, apparently seeKing a woru oi auvicc ironi a iiign™ 
er authority. Tandy finally called a halt to the soul-searching and began 
making the rounds of the table asking for individual commitments. 
When it was over, eight men remained seated at the conference table. 
The other four stood to be let out of the room when the door was un- 
locked. No one faulted them for making the decision they did, but their 
lack of faith would cost them dearly in bonuses over the years. 

The question remains; Why did the eight stay? 

"It was our belief in him, I guess " Gregson ventured. "I know that I 
had started with his brother Bill. Bill could have called me in anytime 
in his lifetime and said, T need you,' and I would have said, 'where' or 
'when,' and I'd have gone. It was the same thing with Charles and his 
father. They had instilled pride in me. They gave me mountains to 
climb, but they made me feel that they believed I was capable of it. 
And I wasn't about to let them down. As I said, my job was to prove 
them right. So if they felt I was capable of doing a job, I didn't dare not 
accomplish it for them. I can't put it into words, but I know it was a 
feeling." 

The eight men who cast their lot with Radio Shack began a marathon 
session that lasted until the early hours of the following morning. 



178 "WHEN ARE WE GONNA GET SOME DAMN STORES OPEN?" 

"We were given a choice of where we wanted to be," Gregson said. I 
chose to go back to St. Louis, Marvin Cash stayed in Houston, Dean 
Lawrence stayed in Seattle, Randy Capp went to Denver. Then there 
was Jim Millang up in Minneapolis, Jack Labar in Pittsburgh, Leroy 
Pratt in Norfolk, and Ken Stallings in Atlanta." 

Two other former Tandy Leather managers also were part of the pro- 
gram that Tandy had laid out. Bill Nugent was already managing the 
first Radio Shack store in Fort Worth. And Jim Buxton was already op- 
erating a store in San Antonio for Radio Shack. 

The ten Tandy Leather Company alumni didn't realize it at the time, 
but they were to become a part of Radio Shack folklore as "The 10 Dis- 
ciples," the trailblazers of a store opening program that would make 
merchandising history. 

"We were the beachhead breakers," Gregson said, "not the troops that 
came in afterwards. We went out and found the locations, we negoti- 
ated the leases, then sent the leases down and had them signed. We 
found the employees, found the managers, and trained them. We physi- 
cally opened the stores, down to cleaning the glass, scrubbing the floor, 
waxing it, cleaning the showcases, and being there when the truck de- 
livered the furniture. In the first stores, when the truck delivered the 
furniture, the merchandise came off the track along with it. So you had 
to check it in, line the store out, see that the pegboard was hung and 
hang the merchandise. In the first stores, under the lease agreements, 
we had to do part of the work ourselves. Some of us actually did the 
carpentry work or found a carpenter to do what needed to be done. 

"Other companies had people that found the location, signed the 
lease, found the employees and trained them, installed the fixtures and 
merchandise, and set up the advertising. When you looked at what they 
were doing, you said, 'God, no wonder we're getting there. We've got 
one guy doing what other people need 10 guys to do.' But we were 
salesmen first of all. We'd grown up in the stores. We'd grown up deal- 
ing with people. We'd grown up learning how to arrange our store, 
learning how to put the thing together. Any ideas that could funnel 
down, we used. We literally opened the stores single-handedly." 

Things, of course, changed as Radio Shack began to grow. 

"As we got bigger, we had our own people designing the stores," 
Gregson said. "You do that when you get bigger. But when you don't 
have any stores to run, you do it all yourself. Today, when you're given 



"WHEN ARE WE GONNA GET SOME DAMN STORES OPEN?" 179 

a full larder to start with, you don't have time to do all those things. We 
used to laugh, those of us who came up through the battle fire. We 
grew up through the thick and the thin. But that was the way we built 
the operation." 

Gregson and the other disciples had a common problem as they start- 
ed their store-opening odyssey. They all had to start from scratch in 
building an identity for Radio Shack. 

"The name Radio Shack meant nothing in St. Louis when I opened 
my first store in the Houseland Shopping Center in 1965," Gregson re- 
counted. The new store actually was the second Radio Shack outlet in 
St. Louis. The first was a converted Walter Ashe Radio Company store 
at 1125 Pine Street in the downtown area that had been bought by 
Radio Shack a few months before. The store, which catered primarily 
to ham radio operators and also had a large industrial business, had a 
totally different atmosphere from the new Radio Shack outlets. For one 
thing, it was located in an old four-story building that at one time had 
been a parking garage. 

"The basic Radio Shack inventory that we began selling in St. Louis 
as we opened stores was parts and pieces," Gregson recalled. "We sold 
to the tinkerer, the guy who was building his own things. But we were 
also selling stereo and hi»fi equipment and receivers and some commu- 
nications equipment to the CB buffs. Charles saw the electronics end of 
the business coming, stereo and hi-fi, so we were building our business 
based on that. This was a departure from the traditional Radio Shack 
approach in Boston. Charles foresaw the company's future in Radio 
Shack, that electronics was coming of age, that it was going to be a by- 
word, a part of our everyday life, a necessity, just as radio had become, 
and that the development was going to be continuous. He had the fore- 
sight to see that there was a marketplace out there that would touch 
every person and every home." 

None of the former Tandy Leather district managers knew anything 
about electronics, Gregson emphasized. But they did know how to sell. 
He recalled his first day in a Radio Shack store. 

"I had a customer who asked for a 10K pot. I didn't have any idea 
what he wanted. So I grinned sort of sheepishly and said, 'Mister, 
I know what I use a pot for. What do you want a pot for?' He laughed 
and I laughed. Then he said, 'You're new.' I said, 'You bet your 
bucket.' He said, 'Come over here, I want to show you something.' He 



180 "WHEN ARE WE GONNA GET SOME DAMN STORES OPEN?" 

led me over to the board and pointed and said, 'This is a 10K pot.' I 
said, 'That's a potentiometer. Why didn't you just ask for a 
potentiometer?' He answered, 'Because we call them pots.' I sold him 
about $60 worth of merchandise. 

"He became a fantastic customer. And every time I opened a store in 
the St. Louis area, and I opened about 16 of them, every time at the 
grand opening, he would walk into that store and announce io me, 
'Gregson, this is your lesson for today.' Then he would walk me over to 
the board and show me something and tell me what it was." 

Gregson chuckled. "One day I was a skin merchant, the next day I 
was an electronics expert. I knew we had technicians who repaired 
merchandise, who knew why and how they worked. We had buyers 
who knew what to buy. My job was not to be the technician or the buy- 
er, but to be the salesman, to turn that merchandise into cash. When a 
customer brought in a record player that didn't work, the technician 
would try to fix it with a screwdriver and then say, T can't help you.' 
That wasn't being a salesman. I didn't need technicians on the sales 
floor. I'd stop the customer at the door and say, 'Let me see if I can 
help you.' 

"Then I'd try to turn on the record player and say, 'You're right, it 
doesn't work. But I've got one right here that does and makes yours 
seem like washing clothes on a river bank with rocks. Why do you 
want this old relic when, at this price, I can give you this piece of 
equipment and we'll take care of it. It's our merchandise and we stand 
behind it. 5 Sales. That's what my world was and that's what Charles 
was always pushing me to do." 

Radio Shack was also developing a new kind of customer because of 
what it was doing in St. Louis and other marketplaces across the coun- 
try, Gregson pointed out. 

"I was opening new stores in the major shopping centers and malls 
and strip centers, but we were noticing a new trend. People were com- 
ing to the strip centers and malls and into our stores in family groups in 
the evening after supper We were selling component stereo equipment 

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working on. So we were developing a basically new business with a 
new customer base." 

The people coming into the new stores also were being exposed to 
Radio Shack merchandise for the first time. Gregson recalled their ini- 
tial reactions. 

"People would come in and ask, 'Do you have any name brands?' 



"WHEN ARE WE GONNA GET SOME DAMN STORES OPEN?" 181 

"We'd say, 'Like what? We have Realistic.' 

"They'd say, 'Oh, no, we mean Sony or Magnavox or General Elec- 
tric or Emerson.' 

"And we'd say, 'Well, we have Realistic and it's a worldwide brand. 
We have stores all over the world, and this is our own merchandise. We 
back up our merchandise and we believe in our merchandise.' What we 
were doing was selling what we had. We had a good price. We sold 
from price. And we sold from the fact that we were servicing what we 
were selling. We were backing it up. And we had our lifetime tubes." 

Gregson smiled as he remembered those lifetime tubes. 

"Tubes were still a prevalent item in radios at that time. We sold a lot 
of tubes. We had two testers in the stores. We'd tell the customers to 
bring their tubes in and test them. Then we'd sell them our Realistic 
lifetime-guaranteed tube. The first step was to convince the customer 
that we meant lifetime. We had a lot of leery customers to start with. 

"They'd bring a tube back and we'd replace it, and they'd ask, 'What 
are you gonna do with that tube, resell it?' 

"We'd laugh and say, 'No.' 

"I kept a hammer under the counter and I'd say, 'Can I have the box 
that that tube I just sold you came in?' They'd give me the box and I'd 
put the old tube in the box and lay it on the counter. Then Pd hand 
them the hammer and say, 'Would you please smash that old tube for 
me.' 

"That kind of led them to believe that we were serious about what we 
were saying, plus the fact that when they smashed the tube there were 
four or five other customers looking at what this guy was doing, and 
then they had to come over and find out. So it was a process we were 
using as a sales tool." 

Over the next three years, the nationwide expansion program gath- 
ered steam. Gregson' s territory expanded to include Kansas, Iowa, and 
Nebraska, as well as Missouri, and he opened 42 stores in the four-state 
area. "We initially bypassed the big cities like New York and Chicago," 
Gregson said. "Chicago was dominated by Allied Electronics and New 
York by Lafayette Electronics. We couldn't afford to march on the big 
cities yet." 

But for some of the newly-minted store managers, the initial going 
was rugged. 

"There were a few of us who had our heads above water, who were 
getting the job done, who were opening quite a few stores," Gregson 
reported. "But we were on the hook for quite a bit of money at the bank 



182 "WHEN ARE WE GONNA GET SOME DAMN STORES OPEN?" 

and we were going to have to go back to the bank and get more money. 
And there were some who were drowning, who were in over their 
heads. So, a year later, we had a meeting with Charles and we con- 
verted to a company-owned operation under which we all became dis- 
trict managers and were paid a salary plus a bonus off the operations of 
the stores." 

Under the new plan, Gregson and the other store managers were 
guaranteed a salary of $7,200 a year, plus a bonus of 50 percent of the 
store profits. 

This was a period in which Tandy was driving his store-opening 
crews relentlessly. 

Gregson recalled sitting in a room with Tandy in Fort Worth. "There 
was one guy on one side of me who had opened nine stores and a fel- 
low sitting on the other side of me who had opened seven stores, and I 
had opened 36 stores in 28 months. Charles was chewing on me about 
not getting any stores opened. I could feel the people on both sides of 
me squirming. He was really letting me have it. I finally said, 'Charles, 
don't you realize how many stores I've gotten open?' 

"He said, Tes, I do. Hell, you've gotten 36 stores open.' 

"And I said, 'What do you want?' 

"And he said, 'Gregson, we both know you could open 36 stores. 
They're open. Couldn't you open 38?' 

"I looked at him and said, 'Yeah, I guess I could have worked a cou- 
ple of more Sundays and did a few other things and gotten 38 open.' 

And he said, 'That's all I'm asking. When are we going to get some 
damn stores open?' And he began to grin." 

As for the guys on either side of him, Gregson went on, "They were 
in hell. They were really suffering, because they knew when Charles 
was finished with me what he was going to say to them. But after he 
finished with me with a grin on his face, he changed the subject to 
something else and he never said anything to the other two guys. How- 
ever, I would guarantee you that in the next 60 days they did a lot of 

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p^rrtimmnfT orir 



tnrougn xo oiner people, i Know una nc uicwcu on mc iu get uiiuugn tu 
other people without having to tear them up. When he rode me, I knew 
he was trying to make a better man out of me. But I also knew he was 
really riding the individual next to me. I guess he figured I could take it 
better than the next guy." 



"WHEN ARE WE GONNA GET SOME DAMN STORES OPEN?" 183 

Many a time at meetings, Gregson said, Tandy chewed on him with- 
out letup for 45 minutes or more. "But I knew down inside that he was 
also getting his message across to a lot of other people in the room. So 
I sold the same way," Gregson said. "We all sold the same way. We 
might have a customer in front of us at the counter that we were selling, 
but we were selling loud enough for the other people in the store to 
hear. That's how we got their attention. And that's what Charles was 
doing. He was selling. He was selling every minute of the day. You 
asked what our feelings about him were? It was a feeling inside us. 
We'd paid our dues. We had our seat on that 747. We didn't know 
where it was gonna go, but we knew we were going to be on it. We 
were gonna stay on it, and we were gonna see where it landed. A num- 
ber of us did just that..." 

Jim Buxton, one of the 10 Disciples, was in the midst of planning the 
opening of the giant Tandy Mart in San Antonio in early 1963, when he 
was summoned to Fort Worth for a meeting with the boss. Buxton had 
begun his career with Tandy Leather Company in Amarillo in 1955 and 
had been managing a leather store in San Antonio since 1962. 

"Charles was asking me about the status of the San Antonio mart and 
was also talking about putting in another mart in Dallas," Buxton re- 
called, "and then out of the blue, he said to me, 'Buxton, do you know 
anything about radio?' 

"I said, 'Well, I know how to turn one on.' 

"And he said, 'Well, there's something happening up in Boston that 
1 m involved in. The bank that brought us American Hide has a com- 
pany in trouble and they want me to come up and take a look at it. You 
go down to San Antonio and build your thing, and I'll look into this ra- 
dio thing.'" 

The San Antonio mart, called Tandy's Wonderland, opened in Sep- 
tember of 1963 and contained Tandy Leather, American Handicrafts, 
Merribee Embroidery, and Cost Plus Imports retail outlets, plus a res- 
taurant, beauty parlor and barber shop. It also contained a location for a 
Radio Shack store that opened a few weeks later. The store, under Bux- 
ton's management, would become the first Radio Shack outside of Bos- 
ton to do over $1 million in annual sales. 

Rachel Barber remembered that some of the most successful Radio 
Shack managers had come from the Tandy Leather Company ranks. 
"They knew the system, they knew how to sell, they knew the formula, 



184 "WHEN ARE WE GONNA GET SOME DAMN STORES OPEN?" 

they knew about daily reports, they knew about turnover. Everything 
that didn't fit our formula didn't work out too well," she expounded. 

She also recalled the skepticism that greeted Tandy's grandiose plans 
for Radio Shack. "I remember when Charles told the accounting depart- 
ment to gear up for several hundred new stores a year. They were 
laughing at him and saying behind his back, The man is a maniac' It 
really boggled the imagination, because even at that time he was think- 
ing in terms of thousands of stores and people couldn't believe it." 

Also getting into the Radio Shack act during this era was Bill Collins, 
Charles Tandy's boyhood friend. 

"When Tandy Leather began to expand nationally, I was interested in 
putting in paint and wallpaper stores throughout Texas," Collins re- 
counted. "So Charles and I had a lot in common there. We'd have cof- 
fee all the time and he'd tell me about his hopes and plans and 
successes. And sometimes we'd meet for lunch at the Blackstone 
Hotel." 

The two friends would often walk past Leonards Department Store 
across the street from the Tandy Leather Company, Collins recalled, 
and Charles would look at it and say, c Tm gonna own that some day." 

Tandy also talked a lot in those days about a book called The Magic 
of Believing, Collins said. "He spoke frequently about the theme of the 
book — that if you believe you can do something and stay with it long 
enough, you can overcome obstacles and accomplish your goals." 

Tandy was totally absorbed in his business, Collins remembered. He 
never engaged in any sports, never played golf or tennis, didn't fish or 
hunt. Collins recalled making a small wager with Jim West once that he 
could get Tandy to play a round of golf. He succeeded in getting Tandy 
out on the course, but after playing two holes at River Crest Country 
Club, Tandy found an excuse to call it a day. 

"Charles was left-handed, so he had left-handed golf clubs," Collins 
related. "After I talked him into playing one afternoon, we finished the 
first two holes. When we got to the third hole, we had a mutual friend, 

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gested we park our golf cart and visit Koby tor a quick libation, wen, 
we stayed at Pvoby's house until about 7 or 8 o'clock that night, and 
that was the end of the golf game. I don't think Charles ever played 
golf again. This was 1954, and I think that's the last physical exercise I 
ever saw Charles take." 

In October of 1964, Collins and Tandy were having lunch at the 
Blackstone Hotel in downtown Fort Worth. Tandy, as usual, was talk- 



"WHEN ARE WE GONNA GET SOME DAMN STORES OPEN?" 185 

ing of his plans for expanding Radio Shack and the problems he was 
having finding qualified people to manage the stores he wanted to 
open. 

"Our business was not doing all that well at the time," Collins report- 
ed. "I think we had decided to close one or two of them, and I men- 
tioned this to Charles." That was all the opening Tandy needed. 

"I've got a great idea, Bill," Tandy said. "You know Fm looking for 
good people. Fm building a management team that's really gonna take 
us places. Why don't you join us?" 

Collins was receptive. "I had a feeling that there was a lot of future in 
Tandy Corporation," he said. "We discussed salary and things like that 
and I told him I would come with him." 

Collins joined the Tandy fold on November 1, 1964. 

His first day on the job, Tandy informed him: "Bill, you've got to 
learn the business just like the rest of us." 

So Collins started behind the counter as a salesman-trainee in the 
Radio Shack store in downtown Dallas. "At the time, there were three 
Radio Shack stores in Dallas, one out in North Dallas, one in South 
Dallas and one downtown," Collins said. "I worked in the downtown 
store from November 1 to January 1 . Then Charles transferred me to 
the University Drive store in Fort Worth which did extremely well. It 
was a large store and had a tremendous business. I worked there two or 
three months and then Charles told me, 'We're going to open a store in 
Arlington. Why don't you manage it?'" 

Collins opened the store in Arlington, a fast-growing bedroom com- 
munity located halfway between Fort Worth and Dallas, in April of 
1965, the first of many store openings in which he would be involved. 

"I not only opened the store, I outfitted it," he disclosed. "At that 
time, we didn't have total leeway, but as long as the store looked good 
and you had a good shelving system with your stereos and things of 
that sort, you were pretty much on your own. The big question was, 
'Should the stereos be at the front of the store or the back of the store?' 
If they were at the back, the traffic would walk by a lot of things that 
they might buy on the way to the back. All of that was beautifully 
thought out." 

Collins also bought the fixtures himself. "It wasn't like it is today," 
he said. "They didn't provide the fixtures. I just found some and got ap- 
proval to buy them. By then, they had ideas about how they liked to 
display the merchandise. The counter system at that time was what we 
called an 'against the wall' counter. The door was in front with a plate 



186 "WHEN ARE WE GONNA GET SOME DAMN STORES OPEN?" 

glass on either side of it. It was a 25-foot front. And as you came in, the 
counter was to the right or to the left. My parts and pieces was the 27 
Series, which was extremely profitable hut very labor intensive. We 
had little cardboard boxes about half the size of a cigar box. You'd just 
line them up on a table and you'd start with your resistors and transis- 
tors and all that, most of which was a mystery to me then." 

On June 1, with another couple of month's experience under his belt 
and the Arlington store beginning to make a little money, Collins re- 
ceived a call from Tandy asking him to come to Fort Worth for a meet- 
ing. When he arrived, he found two other store managers, Bill Spears 
and Ralph Duncan, there. 

Collins recalled the meeting. "Charles walked in and told us, 'I want 
you to go to California. 5 Well, that was a big move for me because I 
owned a comfortable home in Fort Worth. Charles told us he wanted 
each of us to open three stores at sites we selected ourselves, and that 
we could then choose the best location for ourselves and manage it." 

Somewhat reluctantly, Collins agreed to the move, sold his home and 
headed west. 

"We drew for who got first, second, or third choice on where 
we wanted to locate," Collins recollected. "Ralph Duncan got the 
first choice. He decided to go to Reseda in the San Fernando Valley, 
where there was a big, empty W.T. Grant store that he took over. Bill 
Spears chose Anaheim and I selected West Los Angeles. We were to 
open our three stores within a period of three months, staff them and 
then pick the store that we wanted and go from there. We chose the 
sites and hired the managers with the approval of management in Fort 
Worth." 

Radio Shack already had two very successful stores in California at 
the time, Collins related, one in Long Beach and one near San Fran- 
cisco. The San Francisco store was managed by Jon Shirley, who later 
left the company to become president of Microsoft Corp. Shirley was 
named district manager when Collins, Spears and Duncan began open- 

• ^ rv ;i. „ * .., _, j, r ^ r f _ _. n ... j j.1- __ jut. r ~ ~ —^t-. n~"t£± r\ in, Vi i m, 
JuljukI lllCil oUJIwo, iXIiLl IX1C liliCU IwjJwIlCl! V<J ,111111. 

In choosing a store location, Collins said, "We had to keep m mmd 
that Tandy liked the idea of a high sign on a freeway, a sign that thou- 
sands of cars a day would pass. We were able to come up with one of 
those on the freeway between Anaheim and Los Angeles." 

The Los Angeles area, which was in the midst of a growth explosion, 
was a tough nut to crack, Collins found. "Good locations were very 



"WHEN ARE WE GONNA GET SOME DAMN STORES OPEN?" 187 

scarce, housing was very scarce. Rent was usually a percentage of 
sales, and I was going into a new area and had to estimate what the 
sales might be." 

He recalled an occasion when Tandy flew in from Fort Worth and the 
two of them spent an entire day, from early morning until nearly mid- 
night, driving all over west Los Angeles looking for store locations. 
The three sites Collins finally selected were on Pico Boulevard near 
Westchester, in Torrance near the Palos Verdes Estates and in the Le- 
dera Shopping Center near Westchester. He chose the Ledera Shopping 
Center location for his own store, which proved to be a wise decision. 
The store had excellent acceptance from the very beginning. 

One evening during his first Christmas shopping season in California, 
Collins was in his store in the Ledera Shopping Center at about 7 
o'clock when the phone rang. Tandy was on the line with a question. 

"What did you do today?" 

Collins, who was "busier than a cat on a hot tin roof," tried to be ca- 
sual in his reply. 

"We did 2," he allowed. 

"Goddamn it, 2 what? $2? $200?" 

"No, Tandy, we've done $2,000 so far today." 

That made Tandy's evening, Collins said. "I'll never forget that." 

Another thing Collins hadn't forgotten from that era was the way 
merchandise was delivered, in sharp contrast to the methods employed 
later on as operations became more sophisticated. 

"They'd send out from Fort Worth all these paper sacks and all 
they'd have on them was a 27 Series number like 27404. And gosh 
durn, we'd receive half a truckload of that stuff, and it took us all day 
and all night to get the merchandise out of the sacks and put in place. 
But, as the company grew and they began to do their own packaging, 
that really cut the labor down. Then we could run stores with two or 
three people, depending on the size, instead of four or five. I remember 
having two kids sitting on the floor in the back of the store handling 
these labor-intensive items. But they were very profitable." 

The big ticket items were the stereos, Collins said. "At that time, 
there were a lot of new speakers coming out and you had to learn the 
difference between one speaker and the other and the difference among 
stereos. We had no television." 

A memento of Collins' California experience is contained in a re- 
cording he made of a talk by Charles Tandy at a store managers' meet- 



188 "WHEN ARE WE GONNA GET SOME DAMN STORES OPEN?" 

ing at Green Oaks Inn in Fort Worth in 1971, when Collins was a 
district sales manager there. 

"In 1965, I looked for somebody with stamina to hit these new mar- 
kets," Tandy told the group. u So I picked three men to go out to Cali- 
fornia. I worked out a game plan. 'You three guys go out there. I want 
each of you to open three stores. And of the three stores, you each pick 
the best one and you run it.' Some of the guys picked the best one and 
some didn't." 

(Laughter.) 

"I told them, I'll give you guys an option on 2,000 shares at $32 a 
share. They couldn't see what they were getting. They couldn't read the 
crystal ball. These guys were in a position to be regional and district 
managers on the West Coast. But they didn't say, 'I can get this job 
done.' I even made a trip out there. I thought they'd got lost. You don't 
realize what it's like to open a new market. Where you put your first 
flag down. Anyway, those 2,000 shares would be worth a quarter of a 
million dollars today." 

In later years, Collins remembered the episode philosophically, point- 
ing out that he would have had to go into debt to exercise the option at 
a time the stock was selling at about half of the option price. 

In June, 1965, when Collins went west on his store-opening mission, 
Tandy stock was selling at around $16, down from a high of 1914 
earlier in the year. The price dropped even further as rumors began to 
abound on Wall Street that Charles Tandy's earnings forecast of $1.50 
per share for fiscal 1965 was far too sanguine. This was confirmed 
when, on August 10, Tandy had the unpleasant experience of issuing a 
news release dropping his estimate of fiscal 1965 earnings to $1.20 per 
share. The lower earnings, he said, were the result of expenses incurred 
by the Radio Shack expansion program. 

"The opening and operating expenses related to the rapid enlargement 
of the Radio Shack store system from 36 units to 57 units were much 
greater than anticipated, absorbing the earnings recorded by Radio 
Qi„ n „,i r -j-. -,,!:„-. :« thf± vp^r " T^nHv .HL^rlrsrpf! "Thp fHTTPtit extension nro~ 
gram is near completion, however, with me duik or start-up costs occur- 
ring in the year just ended. The objective in fiscal 1966 will be to 
consolidate the expansion to develop Radio Shack's profitability." 

By then, the price of Tandy stock had fallen to 13 5 /s, down some 30 
percent from its 1965 high. 



"WHEN ARE WE GONNA GET SOME DAMN STORES OPEN?" 189 

On September 1, earnings of $1.21 per share on sales of $42.8 mil- 
lion, wer^ officially announced. Although below Tandy's original esti- 
mate, the earnings still represented a 70 percent increase over the prior 
year. Salens had recorded a 79 percent increase, boosted by a $15.6 mil- 
lion contribution from the newly-consolidated Radio Shack subsidiary. 
But all of the earnings had come from the established divisions. The 
cost of opening 21 new Radio Shack stores, plus adverse year-end ac- 
counting adjustments in the operation of the Boston warehouse, had 
wiped out the operating profit of $560,000 that Radio Shack had racked 
up during the first half of the fiscal year. 

Nevertheless, the modest net profit of $680 that Radio Shack had 
managed to eke out was a sharp improvement over the net loss of 
$323,238 it had recorded in 1964 and the whopping $4.2 million it had 
lost in 1963. 

Tandy Leather Company was about to lose its position as the corpo- 
rate "cash cow" to the upstart from Boston. 



Chapter 13 

A Champagne Toast at the 
First of Boston 

The trips between Fort Worth and Boston were coming fast and furi- 
ous. If there had been a frequent flier program in operation in the 
1960s, Charles Tandy would have enough bonus points for a first class 
round trip ticket to Mars. 

"Charles was spending ten days in Boston and four days in Fort 
Worth/' Luther Henderson recalled. "By doing this, he had hands-on 
control of operations of Radio Shack and kept Fort Worth under con- 
trol, too. None of us on the board ever visualized at that time what size 
company Radio Shack would ultimately become. But we finally did 
recognize that it could become, by far, the biggest part of the business. 

"If Charles had told us that it was going to be 500 stores one day, 
we'd have considered that a pretty fair goal for us. Later, when he 
talked about 1,000 stores, a lot of people thought he was really dream- 
ing. " A few of his contemporaries made jokes about what they consid- 
ered his overly optimistic goals. Henderson described an incident that 
took place after his purchase of Pier 1 from Tandy. 

"We'd gotten in some specimen wooden carvings from the South Pa- 
cific. One of them was a life-size figure of a fierce-looking native war- 
rior, probably a Maori, with a very aggressive snarl on his face. We had 
the idea of giving this to Charles, and we took it up to his office one 
day while he was gone, and we put a placard on it that read, 'Who says 
we can't get to $500 million in sales?' Charles just loved it and left it in 
his office for many months thereafter. It really epitomized his attitude at 
a time when the company was still at less than $100 million in sales. At 
that time, $500 million seemed like a very ambitious goal." 

Tandy was a very demanding boss, who worked long hours and ex- 
pected others to do the same, Henderson said. "I never got pushed as 
hard as most people, maybe because Charles regarded me as a personal 
. friend and as an equal. But he could be brutal to others at times." 

191 



192 A CHAMPAGNE TOAST AT THE FIRST OF BOSTON 

"He could be brutal, all right," Bill Michero conceded, "but he tem- 
pered his degree of brutality depending upon the individual being bru- 
talized. There are some delicate souls in this world who will wilt at the 
first harsh word. Then there are others that you need to use a baseball 
bat to discuss things with. So I'd have to say that Charles had a dial set- 
ting for everybody. His technique was to brutalize in public and to pet 
in private. The point is that he wanted to let you iaiow that you were 
noticed and loved. What is worse than being ignored?" 

Tandy's modus operandi was negative motivation, at which he was a 
master, Michero said. "So, periodically, he would seek you out and find 
fault with something you were doing. It didn't matter what. Whatever 
you did could stand some improvement, and he was the one to provide 
that improvement, give it that final touch that made it fly. He v/as the 
kind of guy who, when he walked into the Louvre in Paris and saw the 
Mona Lisa for the first time, said, There should be a little more orange 
right through there.'" 

Bernie Appel acknowledged that Tandy could be brutal at times, but 
that underneath his abrasive exterior lay the heart of a pussycat. Appel 
cited the story of Charlie Levine, a Radio Shack, buyer, as an example. 

"Charlie Levine was a buyer when I was hired at Radio Shack in 
1959. He was a magnificent electronic parts buyer, but he was a very 
sensitive individual. He had a very sensitive stomach. One day, in a 
conversation with his wife, she told me that 'Charlie gets very sick 
whenever Charles Tandy comes to town.' When he knew that Tandy 
was going to be in Boston on Monday morning, he would get an upset 
stomach and the dry heaves on Sunday He couldn't stand the pressure 
of Charles' way of doing things. 

"So one day, I went to Tandy and I said, 'Charles, maybe we ought to 
fire Charlie Levine.' I said it very facetiously. I really didn't want Char- 
lie Levine fired, of course. 'But,' I told Tandy, 'the problem is he can't 
stand the way you pick on him. You're killing him. And, yet, he's 
good. He's gross margin conscious and he's numbers conscious. What 
can we do about it?' 

^•iiaries luu&cu ai mc etna saiu, i guess x emi i piciv un v^jucujuo, tan 
I?' 

"I said, 'Not in the way you do it.' Remember, this was back in the 
early '60s, right after he bought us, and he didn't know me from Adam. 
And he said to me, 'Okay, Bernie, can I pick on you? Do you get sick?' 



A CHAMPAGNE TOAST AT THE FIRST OF BOSTON 193 

"I looked him square in the eye and said, 'Charles, you can pick on 
me all you want, but just keep one thing in the back of your mind. 
You're gonna get it back from me if I don't agree with you. I'm not 
gonna sit back and let you yell at me if I disagree with you.' 

"He said, 'Okay, we'll see about that.' 

"From that day on, in our regular merchandise meetings with all of 
the buyers sitting there, he never once picked on Charlie Levine again. 
If Charlie did something wrong, if he packaged two parts in a package 
when Charles thought it should have been four, if Charlie did anything 
Charles didn't like, Charles would chew my butt out as if I had done it. 
Now, Charlie Levine knew he had done it and he knew that he would 
correct it. But he never got his feelings hurt after that. And this was 
symbolic of Charles Tandy's management style. As a result of this, 
Charlie Levine stayed with the company and made major contributions 
to its growth in electronic parts and accessories. He retired in 1989. But 
to this day, Charlie Levine has a sensitive stomach." 

There was a side to Charles Tandy that few of his associates ever 
saw, Luther Henderson pointed out. 

"He also knew how to stop and relax and enjoy himself for a day or 
two during periods of greatest adversity. He used to say, T can make 
the greatest playboy in the world for a week at a time, but that's all' 
He'd get tired of it. He never took any extended vacations and probably 
never would if he were still alive today." 

Taking a vacation, however, was the farthest thing from Tandy's 
mind as the calendar year 1965 drew to an end. 

The repercussions from his lowered earnings estimate had been felt 
on Wall Street. Shearson, Hammill, which had been carrying Tandy 
stock as a "Buy," issued a bulletin on its research wire changing 
the designation to "Hold," in anticipation of continued "lower-than- 
expected earnings." Charles' gung-ho Radio Shack store-opening pro- 
gram, which had added 19 stores in July and August alone, was taking 
its toll on the bottom line. Bowing to pressure from Jim West and other 
board members, Tandy announced that the "current expansion program 
would be completed after six more stores were opened by the end of 
the year." 

Radio Shack was now operating stores in 20 states from New Eng- 
land to the Pacific Coast. The state-by-state breakdown was Texas, 16 
stores; California, 15; Massachusetts, 13; Connecticut, six; New York, 



194 A CHAMPAGNE TOAST AT THE FIRST OF BOSTON 

five; Oklahoma, Pennsylvania, Rhode Island and Washington, two 
each; and Arizona, Colorado, Illinois, Maine, Minnesota, Missouri, 
New Hampshire, New Mexico, Ohio, Oregon and Virginia, one each. 

In addition, the Mail Order Division was serving over 300,000 cata- 
log customers across the country, and the Industrial Division had more 
than 10,000 industrial and institutional accounts. 

A Standard & Poor's report on Radio Shack published on December 
22, 1965, noted: "The company engineers, designs and subcontracts the 
manufacture of its own brand products under the following trade 
names: Realistic — major components and minor items of audio equip- 
ment, including speakers, tuners, amplifiers, receivers, transceivers and 
tape; Archer — similar products but of a lower price; Micronta — items 
in photography, optics and test instruments; Radio Shack and Skillman. 

"A&A Trading, 50 percent-owned, acts as buying agent for the com- 
pany in Japan," the report added. 

The 50 percent ownership in A&A Trading Corporation had been 
acquired by Tandy as part of the Radio Shack deal. A&A had been 
founded on June 6, 1955, by Tadashi (Tad) Yamagata and Milton 
Deutschxnann, each of whom had put up half of the firm's original 
$20,000 capitalization. Deutschmann had later transferred his 50 per- 
cent ownership to Radio Shack. 

Yamagata, a native of Honshu, Japan, had come to the United States 
in 1951 with his American-born wife, Elaine, whose parents were na- 
tive Japanese. Born in Willow Grove, California, near Sacramento, 
Elaine was 16 when her father, a physician, decided to return to his 
homeland in 1938 to practice medicine. When war came with the 
bombing of Pearl Harbor, Elaine's father was drafted into the Japanese 
Imperial Navy and was stationed in a naval hospital. Elaine spent the 
war years in Japan and graduated from Kobe University. 

Yamagata, whose father was a Methodist minister, had graduated 
from Honshu University in the mid- 1930s and then had joined the 
Nissho Company, one of the largest foreign trade companies in Japan. 
In 1938, he was called to active duty in the Japanese Army and was 
sciil iv officer's naming scnuui. Aitci icccivnig ins cuimm&iMon a yvm 
later, he was assigned to a Transportation Corps regiment then occupy- 
ing North China and Inner Mongolia. He was discharged from the 
Army in 1942. 

"I was not a professional soldier," he said tersely. 



A CHAMPAGNE TOAST AT THE FIRST OF BOSTON 195 

Yamagata then returned to Japan, married Elaine, and headed back to 
China, where he entered the metal trading business in Beijing. He re- 
mained in China until after the end of World War II. 

Elaine and Tad had met in Hiroshima before the war. They were in- 
troduced by his sister. 

"I was quite close to Tad's sister while I lived in Sacramento," Elaine 
explained. "She was married to the minister of the Methodist Church I 
attended there, but she returned to Japan after the death of her husband. 
She was teaching in Hiroshima University and I lived quite close to her. 
By renewing my friendship with her, I got to know Tad." 

After the war, Yamagata became a partner in the Greenfield-Kato 
Trading Company in Tokyo. Then, in 1951, he moved to New York to 
represent the firm in the United States. Elaine became active in the 
business at that juncture because of her fluency in English. The firm 
initially shipped coal and steel to Japan and imported sundries and bin- 
oculars, telescopes and microscopes from Japan. But the Yamagatas 
found the steel and coal business too unstable, subject to too much fluc- 
tuation, and decided to concentrate on general merchandise. 

"We started to bring in bicycles from Japan," Elaine recalled, "but 
the quality was dreadful We had to repair every one of them. 
After we sold them, we still had a lot come back. So we filed a claim to 
Kato-Greenfield in Japan, but they wouldn't honor the claim. So we de- 
cided if they wouldn't honor the claim, there was no use continuing the 
business. So we liquidated it." 

One of the Yamagatas' clients, Radio Shack, was importing optical 
equipment from Japan. Tad and Elaine established a fairly close rela- 
tionship with Milton Deutschmann, who informed them that he would 
support them if they went into business for themselves. 

"Since they were primarily in the electronics business, they said, 
'Why don't you go into the electronics business, too?' Elaine recount- 
ed. "So in 1955, we started A&A." 

The name had two significances, she explained, "standing simply for 
America and Asia." But for the Yamagatas, it had a special meaning 
that only people whose last name begins with a Y can fully appreciate. 
Elaine explained: "Tad's name starts with a 4 Y' and my maiden name 
was Yamao, so we were always at the end of the line in everything. 
That's why we chose A&A, so that we could finally be at the very top 
of the alphabet." 



196 A CHAMPAGNE TOAST AT THE FIRST OF BOSTON 

A&A Trading Corporation started out primarily as an import business 
that dealt mostly in opticals. "We were wholesalers," Mrs. Yamagata 
said. "We imported the goods at our cost and then sold them to our re- 
tail customers. We sold opticals to Radio Shack and to department 
stores like Macy's and Gimbel's and the May Company." 

Their banker at the time was the Bank of Tokyo which had a branch 
in New York. "The bank was very good to us and helped us finance our 
imports," Elaine reported. "We continued to import opticals, but we 
gradually got more and more into electronics. The electronics in the be- 
ginning were of very poor quality. We had a lot of problems, but gradu- 
ally the quality improved." 

Tad Yamagata recalled "the unbelievably poor quality" of Japanese 
products in the 1950s. "It was cheap to buy, but of very bad quality. I 
had to check all of the merchandise. I even had inspectors in Japan to 
inspect merchandise before it left Japan. But, at that time, the condi- 
tions of transportation were very poor and the merchandise had to go 
by boat for a very long time through the Panama Canal. We had prob- 
lems with fungus. I inspected all merchandise when it arrived in New 
York, so my customers were always satisfied. Radio Shack always 
wondered why the merchandise I provided was so good, while the mer- 
chandise supplied by other importers was so bad. So Radio Shack pre- 
ferred to do business with me." 

One day in 1955, Yamagata received a telephone from Milton Deut- 
schmann's brother, Arnold, who was then a Radio Shack executive. 
"We're going to Japan," Deutschmann informed him. "We want you go 
with us." 

"And what are you going to do in Japan?" 

"We're going to buy electronic goods." 

"I'm not qualified to buy electronic goods," Yamagata demurred. "I 
don't know anything about electronics." 

"That's okay," Deutschmann assured him. "We like the way you do 
business. We can teach you about electronic merchandise." 



XiO \s\JJL± V 



land since his arrival in the United States tour years Detore. it was also 
the first trip to the Orient for Lev/is Komfeld, who accompanied 
Arnold Deutschmann and Yamagata. 

"Lew was a good merchandiser," Yamagata found. 

Among the first things the group bought in Japan were speakers and 
speaker systems that were considerably cheaper than those available in 
the United States or anywhere else in the world. 



A CHAMPAGNE TOAST AT THE FIRST OF BOSTON 197 

"Americans were already importing electronics components from Ja- 
pan by then," Yamagata observed. "The Deutschmanns knew Japanese 
components could be used in this country and could be bought at a rea- 
sonable price, so they could make a bigger profit on them than handling 
American-made products. That's how I got into the consumer electron- 
ics field. I was very lucky." 

When A&A began, it had little business other than Radio Shack, and 
Yamagata had serious doubts about its viability. "I wasn't sure we 
could be successful," he admitted. "But Milton Deutschmann promised 
that Radio Shack would support us." By 1963, A&A's business had 
grown to a point where Radio Shack was providing only 25 percent of 
its volume. It was at this point that Charles Tandy entered the picture. 
Elaine Yamagata recalled her initial meeting with Tandy. 

"It was on April 1, 1963, when he suddenly appeared. That was the 
day when the Radio Shack buyers first met Charles Tandy and I hap- 
pened to be in Boston. Our headquarters then were still in New York. 
My first impression of him was that he was a very dynamic person. 
Radio Shack had only nine stores and was buying in very small quanti- 
ties. They weren't too financially stable at that time. Some of the things 
we had bought and had planned for Radio Shack to buy hadn't been 
bought. So business was pretty slow. 

"And Charles came in. One thing I can remember very well is we had 
a little walkie-talkie that was selling very well. And he said to get him a 
quote for 50,000 walkie-talkies. We were really stunned, because 
50,000 was not a figure within our common sense at that time. Sure 
enough, we bought 50,000. We got a reduction in price. A lot of other 
people were also bringing in walkie-talkies, so it wasn't a hot item by 
the time our big shipment arrived. But Charles just made the people sell 
them. That's when the dynamic differences started to happen." 

Elaine recalled how she began taking the Eastern Airlines shuttle be- 
tween New York and Boston more frequently after Tandy's arrival on 
the scene. "I used to carry a little card that gave the quantities of the 
merchandise that we were bringing in for Radio Shack, and he would 
go through the numbers. He would always remember the numbers, and 
sometimes he would question the buys." 

One time, discussing his plans for Radio Shack, Tandy told Elaine he 
was going to have 400 stores some day. 

"I thought to myself," she laughed, 'My goodness, what a Texas 
brag.'" 

Mrs. Yamagata remained grateful to Tandy for staying with A&A 



1 98 A CHAMPAGNE TOAST AT THE FIRST OF BOSTON 

even though the size of the firm was a limiting factor at the outset. But 
Tandy employed it as the vehicle to achieve one of his major objectives 
of buying all of his merchandise in Japan. 

a He knew that we were small and that there were bigger importing 
firms in New York," she said. "But he knew he was going to get big, 
and even though we were still weak, he was going to push A&A and 
put all of his strength behind us so that we would get stronger, too. We 
had good contacts in Japan, but when we're buying 500 units and 
somebody else is buying 10,000, there's a difference. It took a while. 
For the first year he observed us veiy closely, really kept tabs on us, 
and decided to stick with us. After all, he already owned half of us." 

Shortly after Tandy's assumption of control over Radio Shack, A&A 
installed a quality control program under which all Japanese merchan- 
dise was inspected before shipment to the States. 

"Radio Shack then inspected it when it arrived in the States," Tad 
Yamagata reported. "If there was anything wrong with it, A&A would 
repair it on the site so that it wouldn't have to be shipped back to Japan. 
We couldn't afford the expense of shipping it back, since A&A was so 
small. So we required any manufacturer who shipped more than S3 mil- 
lion worth of merchandise to stand behind it. If something was wrong, 
they repaired it. I convinced them it would be smart for them to have 
their own people on the scene in New York so that they could see for 
themselves what was wrong. If there was a major problem, they would 
always have their own people on hand. We agreed to pay for the apart- 
ment rental of the Japanese representatives, so they could have a person 
on the scene. This was a very innovative thing that A&A put in to com- 
bat the quality problems." 

With the Japanese electronics industry still in its embryonic stage, 
there were numerous quality problems at the time. Elaine Yamagata re- 
called an incident when Tandy dropped in unexpectedly at the ware- 
house in New York and found a large amount of defective merchandise 
under repair or waiting to be fixed. 

« r r'u f >«Y% «r/»*v* }f\ti fyp f r p rnr\if\a 1-1-1 r Q y V; » 100 linsd itd on the tables QT\A 

a lot ot tape recorders lined up Demg repairea, :: she recounted, "and 
Charles came down to the basement where the work was being done 
and he said, 'What's going on? Why are these $100 pieces lying on the 
table?' He was very upset. So the people tried to fix them and get them 
out as quickly as possible." 



A CHAMPAGNE TOAST AT THE FIRST OF BOSTON 199 

Tandy always asRed Tad Yamagata to visit the Radio Shack ware- 
house when he came to Boston. "One day," Yamagata recalled, "he said 
to me, Tad, have you been to the warehouse today?'" Yamagata told 
him he was planning to do that later. 

"No," Tandy said, "I want you to do it now." 

"Mr. Tandy, this is not my prime business. My first business is to get 
the merchandise from offshore," Yamagata replied. 

"No," Tandy insisted, "I want you to see the warehouse first." 

"But you have a warehouse manager, you have merchandise people. 
Why don't you ask them?" 

"Because I want you to see what's going on." 

Now Yamagata understood. 

"He wanted me to find out the things that were wrong. I found piles 
of batteries. Warehouse people always picked the batteries from the top 
of the pile where they were easier to get to. So all of the old batteries 
remained at the bottom until their life was gone. I told Charles they had 
to change the way they picked the batteries or the way of stocking 
them. We date-coded the batteries, so we could tell when the new ones 
were being picked for shipment and the old ones were just lying there 
and going dead." 

"Every time Charles went to the warehouse," Elaine said, "he always 
found something to chew people out about." 

He also was a master at putting pressure on the Yamagatas and 
the Radio Shack buyers to get the lowest possible prices from the 
manufacturers. 

"For example," she related, "Charles got a quotation from a large bat- 
tery manufacturer in Japan on a quantity of batteries. And he told us, 
'You've got to get a better quote than that,' which, fortunately, we were 
able to do. Radio Shack was not importing batteries at that time, but we 
did get a very good quote and batteries became and remained a very 
strong item." 

The "battery story" made the rounds at Radio Shack. Bernie Appel 
remembered the story from the standpoint of the Radio Shack buyers 
back in Boston. 

"In 1965," he recalled, "Charles went over to Japan and met in a ho- 
tel room in Tokyo with the president of a company named Novel. They 
offered him batteries with our name on them, and he made a deal. He 
got some really high gross margins. When he came back to the United 



200 A CHAMPAGNE TOAST AT THE FIRST OF BOSTON 

States, he got all of the buyers together and said to us/ Okay, you guys, 
I made the first private label deal. You go make the rest of them.' He 
got the batteries for pennies. It was nickel and dime stuff. But this was 
his first whack at it. After that, he continually reminded us, 'See how 
easy it is to buy private label."' 

Mrs. Yamagata's lasting memory of Charles Tandy is of a dynamic 
man who was also very warm. 

"He was very demanding. He was very forceful. He was very inspir- 
ing, very smart, very good at figures. He was very nice to us. Sure, he 
would sometimes tear us apart, but he always put us together and we al- 
ways left very encouraged. He was a great teacher. He would ask you a 
question out of the blue, and you wouldn't know the answer. But that's 
how you learned. He was very good at that. But they were always im- 
portant questions. He was always pushing and getting others to push us. 
Even if we were not responsible, he made us feel responsible." 

Tad Yamagata added, "He tried to understand the Japanese way of 
thinking instead of forcing his ideas on people. He listened very well. 
He understood very well." 

In 1968, Tandy Corporation acquired 100 percent ownership of A&A 
Trading Corporation and the Yamagatas became Tandy employees. Tad 
held the title of president of A&A Trading Corporation, with Elaine as 
executive vice president. In 1973, the name of the wholly-owned sub- 
sidiary was changed to A&A International. When Tad retired in 1981, 
Elaine succeeded him. She served as president of A&A International 
until her retirement in August 1988. The Yamagatas have two sons who 
work for Tandy Corporation in Fort Worth. Mark Yamagata is a vice 
president of Tandy Electronics and Harvey Yamagata is director of 
Tandy Service Plans. Both were born in China while their parents were 
living there during World War II. 

Tad Yamagata retained a fond memory of how Tandy, on occasion, 
utilized his sense of humor to drive home a point. He gave as an illus- 
tration an incident that occurred after Tandy assumed control of Radio 

"Uharles acquired Radio ^nack in April of 1^63, and at me end ot me 
year, in December, I was in Japan. I came back to New York just before 
Christmas. Mr. and Mrs. Tandy went to Japan for New Year's Eve. He 
didn't tell me about it in advance, but when he got there he called the 



A CHAMPAGNE TOAST AT THE FIRST OF BOSTON 201 

Bank of Tokyo and expected the bank to take him around to see all of 
the manufacturers who were selling merchandise to Radio Shack. And 
he expected to visit the A&A office in Tokyo. But most of the compa- 
nies in Japan close down for the new year between December 28 and 
January 3, except the banks. They have to collect the money. When 
Charles came back to the United States, he joked with me. 

"He said, 4 A&A don't work. The banks in the States are noted for 
having a lot of holidays. But even the banks were working in Tokyo, 
but not A&A.' 

"He never let us forget that." 

The Bank of Tokyo's New York branch figured in a problem that 
presented itself shortly after Tandy assumed control of Radio Shack. 
Bill Brown, the Boston banker, relished recalling the incident. 

"I got a call from Charles early one morning before I got to the 
bank," Brown recounted. "When I got in, I was told that Mr. Tandy is 
eager to talk to you. I called him up." 

"Hey, buddy, old partner," Tandy said. "We've got troubles." 

Brown said, "You may have troubles, but I don't have any troubles." 

"Yes, you do," Tandy persisted, "with the Bank of Tokyo. You didn't 
renew your letter of credit with Radio Shack and the bank is raising 
holy hell." 

Brown's response was, "I can't help that." 

Radio Shack, Brown explained, had been buying merchandise in Ja- 
pan against letters of credit from the First National Bank of Boston to 
the Bank of Tokyo. But when Radio Shack had gotten into financial 
difficulty, the bank had stopped renewing the credit letters. The Japa- 
nese suppliers, however, not realizing what had occurred, had continued 
their merchandise shipments. 

"They kept on shipping and shipping and shipping," Brown reported. 
"So now the Bank of Tokyo had a lot of money tied up in Radio Shack. 
They had a couple of million in it. I said to Charles, 'We're not bailing 
them out.'" 

Tandy asked Brown if he'd meet him in New York to talk with the 
Bank of Tokyo representatives, to which Brown agreed. The next day, 
Tandy and Brown met with the manager of the Bank of Tokyo's New 
York branch in his office. 

"The manager had an interpreter," Brown recalled. "He said he 



202 A CHAMPAGNE TOAST AT THE FIRST OF BOSTON 

couldn't understand English. Every time I explained to him that we 
weren't going to issue any letters of credit, that he was unsecured and 
that he was going to have to fend for himself, he'd tell us through the 
interpreter that he didn't understand. He kept turning to the interpreter 
and saying that he didn't understand. Finally, the interpreter told us, 
'He isn't going to cooperate. He insists on your letter of credit.'" 

At this point, Brown said, "I pulled a Charles Tandy. I stood up and 
headed for the door. I was halfway out the door when the branch man- 
ager grabbed me by each shoulder and pulled me back into his office. 
'Where are you going?' he asked. Now he suddenly could speak 
English. 

"I'm going back to Boston," Brown said. 

"No, no, no. We will work out something." 

Brown modified his position. "The only thing I'll do," he declared, 
"is I'll permit, if the sales and receipts are adequate over a period of 18 
months or so, to pay your backlog, provided you'll continue to ship 
merchandise to Radio Shack." 

The deal Brown made with the Bank of Tokyo was that the bank 
would receive monthly payments from Radio Shack greater than the 
cost of the merchandise shipped from Japan. 

"Charles said he could live with that," Brown emphasized. "What this 
meant was that over a period of 12 to 18 months, the backlog would get 
paid. And since the bank had no other choice, they agreed to it. 

"Charles was my kind of guy," Bill Brown remembered fondly. 
"He'd get right to the point on whatever it was. He didn't beat around 
the bush. He was bright, he was smart, he knew what was going on, 
and he knew how to make money. But he could also tarn to one of his 
executives like Charlie Tindall, when Charlie was a senior vice presi- 
dent and chief financial officer, and say, 'Charlie, you dumb shit.' I got 
used to it after a while, but on the surface it was, 'You dumb this and 
you dumb that.'" 

Brown recalled the time Tandy tried to hire him away from the bank. 



V'V Ciiii-WSwi. 



to become president of" the company. Nobody m the company ever 
knew this. I said, 'No, but I certainly appreciate your offer.' 

"He said, 'Why not?' 

"And I said, 'Charlie, this bank has been good to you and you've 
been good for the bank. You and I enjoy doing business together.' 

"And he said, 'That's right.' 

"Then I said, 'You know, if I were to work for you, the first time you 



A CHAMPAGNE TOAST AT THE FIRST' OF BOSTON 203 

called me a dumb shit I'd be gone and my options wouldn't be worth 
anything."' 

Some years later, after the Tandy stock had escalated sharply, had 
been split and had kept on rising, Charles walked into Brown's office, a 
big grin on his face. 

"Well, you dumb shit," he exclaimed, "if you'd accepted my offer 
you'd be a damn sight richer than you are today." 

"No, Charlie," Brown replied, "I wouldn't still be with you." 

Just about noontime on April Fool's Day in 1978, Brown was sitting 
in his office talking on the phone. He had a luncheon engagement with 
a bank customer on his schedule and was already running late. Just as 
he hung up the phone, his secretary walked in and announced that 
Charles Tandy was in the reception area waiting to see him. 

"But I don't have an appointment with him," Brown complained. 

"I know that, but he insists on seeing you." 

"Fine, send him in." 

Tandy strode into Brown's office. 

"Do you know what day this is?" he demanded. 

"No, should I?" 

"It's the anniversary of my buying Radio Shack," Tandy announced. 

"Now, Charles reached into his coat pocket and pulled out a bottle of 
Dom Perignon. Then he reached back into his pocket again and brought 
out two champagne glasses courtesy of the Ritz-Carlton Hotel. I went 
to the door of my office and told my secretary to call one of my associ- 
ates at the bank and tell him to take c Mr. So-And-So' to lunch, that I 
was unavoidably detained. By now, Charlie had the bottle opened. 

"I said, 'Charlie, I don't drink during the day and I never drink in my 
office.' And he answered, 'Well, you are today.' So he poured the 
champagne and the two of us had a drink. Of course, he now offered 
me a cigar. He used to smoke those cheap cigars. They'd just kill you. 
And I love to smoke a cigar, but I'd always turn down one of his when 
he offered me one. I'd say, 'No, thank you, I won't smoke one of those. 
If you want me to smoke with you, give me a decent cigar.' 

"Now Charlie reached into his pocket and he pulled out four or five 
$2 or $3 cigars and put them on my desk, and he took out one of his 
darn White Owls, or whatever it was he smoked, and we had a smoke 
together." 

There was a moment's pause and then Brown said, "God, he was fun 
to do business with." 



Chapter 14 

"/ Wish My Father Was 

Here Today" 

In early February of 1966, Charles Tandy picked up the telephone 
late one afternoon and dialed the number of his old friend and erstwhile 
business partner, Phil North. He asked North to join him for a drink at 
Green Oaks Inn, a splashy new hostelry on Fort Worth's West Side in 
which North was an investor. 

Tandy respected North's business acumen and liked to talk to him 
about his business. The two met often, usually at Tandy's apartment, 
where Charles bounced ideas off North. North had built a sizable estate 
from a series of astute investments after receiving several million dol- 
lars from the sale of his stock in Carter Publications, Inc., the owner of 
the Fort Worth Star-Telegram. He had inherited the stock after the 
death of his father, James M. North, Jr., the newspaper's long-time and 
highly-respected editor. Although Phil had been groomed to succeed his 
father as editor of the newspaper, he had left the organization after a 
falling out with the majority owners and the top management. 

Tandy's reason for asking North to meet him at the Green Oaks bar 
was to offer him a job. "He talked about Radio Shack and told me he 
really thought he could do something with it," North recalled. "He said 
that he wanted somebody with him that he could depend on, and that 
since we'd always worked well together, would I come with him? I told 
him I wouldn't come with him if he was the last S.O.B. in the world. 
And Charles said, 'I wouldn't work for you, either. What would you be 
willing to do?'" 

North thought for a moment, then said-, "I'll buy Tandy stock and go 
on your board and work with you in an advisory way provided we 
agree that neither one of us will sell a share of stock until the price 
reaches 60 or Tandy Corporation has half a billion dollars in assets or a 
billion dollars in sales." 



205 



206 "I WISH MY FATHER WAS HERE TODAY" 

Tandy said, "It's a deal." 

The two clinked glasses and ordered another round. 

At that point, North recalled, Tandy said, "We've got to start paying 
you something. How am I going to pay you?" 

North answered, "At the end of each year, give me an envelope with 
a check in it." 

"But how am I going to know how much the check is for?" 

North's answer was, "If it's for the right amount, I'll be back the next 
day. If it's not, I won't." 

Another clinking of upraised glasses solidified the pact, and North 
joined the Tandy payroll as a consultant "on sort of a daily basis." 

North joined the Tandy board on February 19, 1966. Also elected to 
the board at the same time was Bob Lowdon, the former printing sales- 
man and Dave Tandy's hunting and fishing companion, who was now 
president of the Stafford-Lowdon Company. 

"The enlargement and diversification of our board steps up the 
breadth of business experience available to direct the widening activi- 
ties of the company and we are very pleased to have the leadership of 
Mr. Lowdon and Mr. North as our company reaches the $50 million 
mark in annual sales," Tandy said in the news release announcing the 
new directors. 

In the same release, Tandy announced the authorization of 20 new 
Radio Shack stores and noted that by June 30, 1966, there would be 
close to 250 Tandy Corporation stores in operation in 125 cities in the 
United States and Canada, with 150 stores in the Tandy Leather Com- 
pany craft supply division and 100 stores in the Radio Shack division. 
"Current projections show that we will have accomplished our objec- 
tive of increasing both sales and earnings per share over 300 percent in 
just five years," Tandy added. "This rate of growth continues to be a 
primary objective of the company." 

Shortly after his deal with Tandy had been cemented, North was hav- 
ing dinner at home when the phone rang. Tandy was on the line. 

"What's me problem?" 

"The accounting department says that since you come into the office 
every day, they have to pay Social Security for you. And in order to pay 
Social Security, they have to deduct it from a salary. So they have to 
pay you a salary so they can deduct the Social Security." 

Tandy paused to let that sink in, then added, "Is it okay if we start 
you at ?" He named a figure and hung up. Five minutes later, 



"I WISH MY FATHER WAS HERE TODAY" 



207 



North's phone rang again. It was Tandy again. "Is that figure I told you 
okay?" "I guess so," North responded. North laughed at the recollec- 
tion. "That was the last time Charles and I ever had a discussion about 
money." 

In North's opinion, one of Tandy's major strengths as a manager was 
his ability to "play off people. 

"He'd say something outrageous to see if you would react. He 
wanted you to defend your position or contrary view. He'd play the 
devil's advocate. He'd think things out loud with you that way, and 
sometimes he'd reach a consensus that way. He wanted to hear your 
opinion if you disagreed with him. He enjoyed animated conversation. 
It might have sounded to others that we were getting ready to have a 
fist fight, but he wanted people to speak up." 

Another of Tandy's strengths was the fact that he knew when to let 
loose, North said. "He had many people who knew a lot more about 
their individual jobs than he ever could, and he let them run that part of 
their job. He didn't try to run everything. He knew that he didn't know 
everything. Most of all, he knew how to stimulate people to excel, 
either by persuasion or by kicking them a little bit or praising them, but 
mostly by just training them. If anybody didn't do their job, he took the 
blame. He'd say, 'It's my fault for putting that man in the wrong slot or 
for not training him properly.'" 

One of Tandy's favorite expressions during the period he was build- 
ing Radio Shack was, "If you own all the filling stations, it doesn't 
matter who owns the refineries," North recalled. 

"What he meant by that," North explained, "was that if you own the 
retail stores, you can buy from the best manufacturers in the world and 
have your pick of them. And since you have such huge volume, the 
manufacturers will come to you to show you their best and their newest 
products. And you'll get them first because you're the biggest. In addi- 
tion, when you have such big buying power, and it's really a good item, 
vmi mn tpii th- tr^riufhrtnrgr 'T'11 take si*x month s of your production. 
You have no credit problem with me, you have no sales expense with 
me for six whole months. Your line is going to run smooth as silk turn- 
ing out goods 24 hours a day.' He's going to give you a very low price 
to get that line going for six months without having to stop it and 're- 
honk' the mold." 

Tandy repeatedly emphasized, North went on, that "When you've got 
stores everywhere, you can say to people, Tf you buy an item in New 
York and go to California and it breaks, you can bring it back to any 



208 "I WISH MY FATHER WAS HERE TODAY" 

one of our stores and we'll replace it. You don't have to have a sales 
slip that you always lose just before something breaks or a warranty 
that always expires the day before it breaks. If it's got Radio Shack on 
it, we make it good.' You get an awful lot of good will that way." 

In the spring of 1966, however, Radio Shack was still a long way 
from achieving that national presence. There were still a lot of people 
around the country who had never seen the inside of a Radio Shack 
store. One of those was John McDaniel, a retired Marine living in Jack- 
sonville, Florida. McDaniel had never even heard of Tandy Corporation 
or Radio Shack when he talked to a friend in Fort Worth about employ- 
ment opportunities in the Dallas-Fort Worth area. 

"Why don't you talk to the people at Tandy?" the friend suggested. 

"I thought he said, 'Candy,'" McDaniel recalled. "I asked him, 
'Who's Candy?'" 

The friend said, "Not Candy, Tandy." 

And McDaniel asked, "Who's Tandy?" 

Recalling the incident, McDaniel said, "They didn't have a Radio 
Shack store where I lived in Florida. But when my friend asked me if I 
knew of Tandy Leather, I did, because there was a Tandy Leather store 
there. And he said, 'Well, that's the company I'm talking about. They 
own Radio Shack, too.'" 

McDaniel was looking for a job in the Fort Worth area because his 
wife's father, who lived there, had suffered a disabling stroke. "We had 
planned to spend the rest of our days in Jacksonville," McDaniel said, 
"but Gail's father's stroke dictated we should come to Fort Worth. I in- 
terviewed for two jobs when I made the decision to move. One of them 
was with Collins Radio in Dallas and the other was with Tandy Corpo- 
ration. I took the Tandy job simply because it was in Fort Worth." 

Toward the end of his Marine career, McDaniel had begun studying 
accounting at night so that, as he put it, "when I did retire, I could do 
something other than shoot a rifle." He had found employment as an 
accountant in Jacksonville after returning to civilian life in 1964. But 
the job for which he interviewed at Tandy was as a check-signer. "A 
check-signer," McDaniel explained, "is just what the word says. You 
signed all the checks that went out. Tandy Corporation was smaller 
then, not very automated, and we signed all the checks manually. 
Charles liked to have someone that he could depend on to get that final 
look at the checks before they went out." 

McDaniel was interviewed by Charles Tindall, then a vice president 
and treasurer, who offered McDaniel the job. "We made the deal," 



"I WISH MY FATHER WAS HERE TODAY" 



209 



McDaniel said, "even though Tindall hadn't talked to Charles about it 
at the time." 

The McDaniels arrived in Fort Worth with their wordly possessions 
on a Saturday in early May. On the following Monday morning, he 
reported for work. "I worked on Monday and Tuesday," McDaniel 
related. "This was when the offices were on West 7th Street. Charles 
had been out of town, and he interviewed me on Wednesday morning 
after he got back." The interview began at 9 o'clock in the morning in 
Tandy's office, with Tindall and Jim West also present, and lasted until 
well into the evening. 

Finally, at about 9 o'clock, Tandy turned to Jim West and asked, 
"Well, what do you think of this guy, Jim?" West said, "I believe I like 
him." 

"I do, too," Tandy said. "Let's hire him." 

Tindall, who had been taking all of this in with more than passing in- 
terest, now declared with a sigh of relief, "God, Fin glad. He's been 
working for us for two days." 

After working as a check signer for about eight months, McDaniel 
was moved into the Accounting Department. "We had three accoun- 
tants at me time in me ivauio Diiaciv j^ivi&iun, nc ici<cuic;u. i was mc 
third. I was an accounting assistant working under the controncr. Later 
on, we split our accounting functions into units and Charles gave me 
one and he gave someone else one." 

McDaniel would go on to become controller of Radio Shack before 
being named senior vice president and controller of Tandy Corporation, 
a position he held until his retirement in January of 1989. 

Some of McDaniel' s early memories of Charles Tandy go back to 
early 1967 when Radio Shack had about 130 stores on which he was 
doing the profit and loss statements. 

"I found out something about Charles' vision early on," he recounted. 
"We had started in Boston with just a few stores and we had expanded 
in Texas and did very well in those stores in Texas and surrounding 
states. Then we moved on out to the West Coast with stores. When I 
did those profit and loss statements, Fd add up the profits we'd made in 
the east and the profits we'd made in Texas and surrounding states. 
Then Fd get down to the West Coast and lots of those profits evaporat- 
ed because we had such big losses out there." 

McDaniel remembered Charles coming into his office one morning 
while he was manually doing the P&Ls. 

"Well, how are we doing?" 



210 "I WISH MY FATHER WAS HERE TODAY" 

"We were doing all right when I was doing the East Coast and Texas, 
but now I'm out to Los Angeles and we're losing it all" 

Tandy placed a hand on McDaniel 's shoulder and said, "You know, I 
knew we were gonna do that, and we'll keep on doing it for a while. 
But once we get 50 stores around Los Angeles, then we're gonna start 
making some profits because we can cover advertising." 

McDaniel was frank to admit that from what the profit and loss state- 
ments told him, he thought Tandy was out of his mind at the time. "But 
that was Charles' vision," he said. "He knew where we were going. 
However, even with his great vision, I don't believe he ever thought 
he'd wind up with as many stores as he did. But he knew better than 
most of us how many stores he was going to have. There's no question 
about that." 

McDaniel recalled an incident that occurred a few years later when 
Radio Shack had about 500 stores and Tandy was pushing Bill Nugent, 
the senior manager in store operations, to open more and more stores. 

"Nugent told him that we had all the stores that we could digest and 
that the country was saturated." 

Tandy looked Nugent in the eye and said, "I've drug you almost to 
the top of the hill. Can't you take that last step by yourself?" 

Another time Tandy told Nugent, after another argument over the 
store-opening program, "You know, you've fought success so hard, 
you've almost won." 

McDaniel 's favorite put down, however, was the needle Tandy in- 
serted into Jim Buxton when Buxton was a regional manager in Cali- 
fornia. "He had been running very poor sales reports in his region," 
McDaniel related. "One month his sales were much better and he was 
bragging to Charles about how well he was doing. Charles was merci- 
less. He said, 'It's hard to fall out of bed when you've been sleeping on 
the floor.'" 

McDaniel' s overriding memory of Tandy was that of a man in a 
hurry. "He was in a hurry to get it done and he understood his 
priorities." 

Shortly after the conversation in which Tandy had assured him they 
would start making money in Los Angeles after they had 50 stores in 
the area, Tandy went to Southern California and personally handled the 
purchase of a small chain of six electronics stores. 

"We guys who put the numbers together and handled the assets 
thought he overpaid for what he got. And he probably knew he over- 



"I WISH MY FATHER WAS HERE TODAY" 211 

paid," McDaniel said. "But he was in a hurry. He wasn't buying assets, 
he was buying location. He didn't quibble much on the purchase. He 
gave them their price. But what he really wanted was their locations. 
And, you know, we got rid of their merchandise in a month and put in 
our merchandise. So we got there a lot quicker his way." 

He recalled when a decision was made to go into Memphis, Tennes- 
see, a man named Bennett Hunter was made a district manager and 
given the chore of opening up the area. "Bennett looked for locations 
there and kept putting things off and putting things off," McDaniel said. 
"By most people's measurement, it would not have been inordinately 
long. But to Charles, he was dragging his feet. So Charles went over to 
Memphis and in two days came back with five locations. We opened 
the stores up and that's how we got into Memphis. Charles went there 
and did it himself" 

A new Radio Shack store in that era of the late 1960s opened with 
$25,000 to $28,000 in inventory, McDaniel reported. The fixed assets 
ran another $22,000 to $25,000. "But for everything we put into the 
store in the way of inventory, we had to have backup in the warehouse 
in about an equal amount. So opening a store in those days cost us 
about $75,000 to $80,000." 

Tandy's policy was to lease real estate rather than buy it. "I don't 
guess he would ever have bought any real estate if he hadn't been 
talked into it," McDaniel said. "He felt about buying real estate the way 
he was about you buying a home. His attitude was, 'Don't buy it, rent it 
and buy Tandy stock with the money' He kidded Bill Nugent after Nu- 
gent once bought a boat. He used to remind him how much the boat 
had really cost him in light of the appreciation in Tandy stock. What 
Charles apparently never understood was that Bill might have enjoyed 
that boat more than having the stock." 

Tandy had a similar attitude about leasing rather than owning 
warehouses. 

"I didn't fault his theory about leasing space," McDaniel said, "But 
over the long haul, if you have deep pockets, it would be a mistake to 
go the leasing route. But if you don't have deep pockets, and you want 
to put your money into opening stores, as was the case with Radio 
Shack, it was better to lease than to buy real estate. It's true, a person 
could look back and say, Ten years ago we could have bought that for 
so-and-so.' But we didn't have the money to buy it then. It may have 
looked like we made some bad calls by not buying that stuff, but the 



212 "I WISH MY FATHER WAS HERB TODAY" 

truth is if we'd bought it we couldn't have opened as many stores as we 
opened. So I think Charles' approach was correct for the time. I think 
he used his assets wisely." 

Charles Tandy's understanding of numbers never ceased to amaze 
McDaniel. "He understood gross profits and how important they were 
and how he could increase margins by going private label as opposeu to 
name brand/ 5 McDaniel said. "He had great vision in knowing what the 
cash needs of the company were going to be, and while things might 
have gotten tight at times, never in all of the times that I was helping 
with our finances was there a need for us to say to our people paying 
the bills, 'Hold up these for 48 hours until we get the money.' We never 
held up any payables or any payrolls one minute, and I think that's one 
of the reasons we had such good relations with so many vendors. They 
knew we were good pay. We never put them off. Sure, there were times 
we had to hustle around to get the money, but Charles saw that as his 
job and not the accountant's job. And he always had the money there." 

McDaniel spoke of companies that made it a practice to pay their 
vendors and other suppliers as slowly as possible. This was called 
"riding." Tandy never did that. "As soon as an invoice came in, Charles 
liked to pay it," he noted. "In the early days, he didn't even want us to 
hold it until two days before it was due, because he thought we might 
be one day late if we did that. So we paid them as they came in. Later 
on, when Charles wasn't watching us that closely, we started riding 
them as long as we could, but that was just good business. The money 
was always there." 

Tandy wasn't much of a stickler for rules, anyway, McDaniel said. 
"We operated sans rules most of the time. Charles didn't care about 
writing memos. He liked to communicate, but he preferred to do it by 
word of mouth and not by the written message." Tandy would some- 
times say to him, "Well, they wouldn't do it this way in the Marine 
Corps, would they?" And McDaniel would respond, "I'll bet they 
didn't do it that way in the Navy, either." 

McDaniel told of the time Tandy decided he was going to reorganize 
the company after an analyst liau wiiucii Iliai uic uigaiiizatiGii Ciiait re- 
sembled a bowl of spaghetti. 

"In lots of respects, it was like that," McDaniel admitted, "because 
we didn't even have formal charts of organization. Charles just didn't 
really believe in that kind of thing. He never got around to it. It just 



"I WISH MY FATHER WAS HERE TODAY" 213 

wasn't his management style. He'd much rather just sit there and run 
the whole company. He didn't like having a big staff and we never had 
one. Well, this time when he was talking about reorganizing the com- 
pany we had five regions covering the United States, and Charles de- 
cided he was going to appoint an assistant regional manager for each 
region who would be responsible, in every way for half of the stores in 
that region. But the regional managers were going to be responsible for 
the advertising and the warehousing." 

McDaniel told Tandy "Charles, that doesn't make a bit of sense. 
You're giving one guy equal responsibility for half of the stores, but 
you've got the other guy running the warehousing and the advertising. 
Don't you think he might be partial to his stores? Especially when he 
gets paid on how well his stores do?" 

"Well, I think it'll work," Tandy snapped. 

"Well, I don't," McDaniel persisted. "If you were in the Navy and 
you had an aircraft carrier, would you have an admiral for the bow and 
one for the stern? Which way do you think the ship would go?" 

That stopped Tandy for a moment, McDaniel recalled. "But no one 
ever stopped him for long," he went on. "He informed me in no uncer- 
tain terms, T don't have an aircraft carrier out there. I've got two PT 
boats.'" 

Tandy had a different management style from anything he ever 
learned at the Harvard Business School, McDaniel maintained. "He 
could be rough, but he was also very human. I think the people that he 
was roughest on were the people in the top end of management, the 
people who could talk back to him. Charles would come in and get all 
over me on some subject. But he knew I could fight back on pretty 
even ground with him and that I had no fear of him. But if he would go 
out to a warehouse where he'd talk to a guy at a lower economic level, 
Charles would never put him down, he'd never give him a hard time. 
He was a heck of a lot nicer to them than he was to a guy like Bernie 
Appel or John Roach or me. You could always tell by the tone of his 
voice what type guy he was talking to. I always admired that in him. 
He never took advantage of anyone who couldn't fight back. 

"But even when he roughed you up, after he got through with you, 
you had the impression that he was trying to teach you, that he was try- 
ing to help you, and that he wasn't doing it for any vindictive reason. 
And he didn't have a long memory of the things that he jumped on you 



214 "I WISH MY FATHER WAS HERE TODAY" 

about, and he gave you lots of rope to make your own decisions. I think 
the public perception of Charles was that he was a great big tough guy. 
But guys who knew him as I did didn't view him as a great big tough 
guy at all. I don't know that Charles ever gave me a direct order: 
'You've got to do so and so.'" 

When he felt Tandy was off base on some directive, McDaniel said 
he simply ignored it. "I just didn't pay a bit attention to it. He'd give 
you a lot of rope in that respect and he didn't try to hang you with that 
rope." He recalled a receivable report he used to make for Tandy. "It 
was a cumbersome thing to make, its value had since passed and I per- 
ceived that we didn't need the report any more. So I asked Charles one 
day if I could stop making that report. 'Hell, no/ Tandy told me. T use 
that report ail the time. I've got to have it.' I knew he didn't use it, so I 
just quit making it. Over a year later, he asked me for that report one 
day. He said, 'Where's last month's report?' I answered, 'Charles, I 
haven't made that report in over a year.' I think he was so embarrassed 
that he didn't say another word about it." 

John Roach also recalled following his own instincts on whether or 
not to act on the constant stream of ideas, thoughts and suggestions that 
Tandy threw at his executives. "You knew, and I'm not sure why you 
knew — I guess your cohorts kept you squared away — that just because 
Charles suggested that you do something didn't mean a damn thing; 
and that beyond that, it was up to you to exercise your judgment on 
whether you ought to do it, knowing that in two or three months, when 
he thought to ask you about it again, that you would have the wrath of 
God to pay if you hadn't made the right decision. Even if the right deci- 
sion was to ignore Charles." 

The thing McDaniel remembered most about Charles Tandy, howev- 
er, was how much he liked to work. "He worked late every night, never 
going home before 9 o'clock. But he'd come in late, maybe around 11. 
I was the other way. I went to work early and tried to get home by 6 
o'clock. He'd call me the next day and say, T tried to get hold of you at 
/t.oa _~. r n ^'^i^^i^ ' i^a qrj-tr 'nrvtpii-p woo t-\r\ on?} here. Charles. I'd uone 

home. 7 And he'd say, *un, l wasn't worried aboux you. I knew you'd be 
back.' He worked seven days a week. Some of the guys who'd accept 
it, he'd talk to them for an hour on the phone on Sunday. I didn't like to 
talk business on Sunday, so he quit calling me. I gave him 100 percent 
during office hours, and I came in on Saturday, as did all the execu- 



"I WISH MY FATHER WAS HERE TODAY" 215 

tives. It's easy to understand why we all came in on Saturday. We were 
a retail company. Stores were open on Saturday. Store managers would 
call in on Saturday. They'd want somebody to talk to." 

* # # 

McDaniel's arrival on the scene in 1966 coincided with a high point 
in Tandy Corporation's financial history, the eclipsing of the $50 mil- 
lion mark in total revenues in the 1966 fiscal year. The principal con- 
tributor to the sales gain was Radio Shack, which contributed $20.2 
million, an increase of 30 percent over the prior year. Tandy's net earn- 
ings and earnings per share were up 51 percent over fiscal 1965. 

"The earnings performance/' Charles Tandy observed in his letter to 
shareholders in the 1966 Annual Report, "was in keeping with the 
growth projections of the company, as a new high of $3,198,154 was 
recorded. After provisions for Federal Income Taxes of $929,887, net 
earnings amounted to $2,268,267, or $1.83 per common share on the 
1,240,290 shares outstanding at the year end." 

Radio Shack, he pointed out, had made its first significant contribu- 
tion to earnings during fiscal 1966, providing $599,734 of consolidated 
net income for the year. A pattern had been set. Radio Shack had ac- 
counted for 40 percent of the consolidated sales and 26 percent of 
the consolidated net income of Tandy Corporation. These numbers 
would continue to grow as Radio Shack would begin to supplant Tandy 
Leather as the corporate cash cow. 

As the fiscal year ended on June 30, 1966, Radio Shack was operat- 
ing 87 stores in 25 states, an increase of 30 stores from the prior year. 
The 100-store milestone would be passed in August, and in September 
ten more stores would be opened in California, Nebraska, Georgia, 
Missouri, New York, Arkansas and Texas. Also, for the first time, the 
list of customers receiving Radio Shack catalogs would top the one mil- 
lion mark. 

Tandy Corporation now was the recipient of a plug for its stock from 
an unexpected source, when an advertisement appeared in an astrologi- 
cal publication under a headline that read: "Special Stock of the 
Month." Tandy stock, the advertisement proclaimed, was coming under 
a very favorable planetary configuration from Venus, Uranus, and Jupi- 
ter. Since Venus was the planet of "artistic and feminine influences"; 
Uranus, the planet of "electricity, air, and inventiveness, which also 
rules television and radio"; and Jupiter, the planet of "entertainment and 



216 "I WISH MY FATHER WAS HERE TODAY" 

good fortune," this was "a strong combination allied with Tandy 
Corp.'s activities over the next two years/ 5 the advertisement stated. 
"Increased earnings should reflect in the company's stock, market 
wise." 
Tandy stock, however, failed to react to the plug or reflect its better- 

+Vion„Avno^A^ Pommryo nf*r£nrmor\nR Tt w^c tr^rlina in the $14 rpmoe O 1 * 

7.7 times earnings and below its 1965 close of 15/4 in mid™ September, 
when Goodbody & Co. issued a research bulletin calling the stock "rea- 
sonably priced and attractive for long-term gains." With the economy 
slowing down, Goodbody took note of the fact that a good portion of 
Tandy's sales were to institutions — schools, hospitals, prisons, 
etc. — which, the report asserted, "had proven to be recession-resistant 
in the past," 

This was the climate that prevailed for a surprising announcement 
in mid-September that Tandy was entering the nursery business with 
the acquisition of Wolfe Nursery, Inc., a 40-year-old Stephenville, Tex- 
as, firm with annual sales of $1 million. The price was 15,000 shares of 
Tandy stock, giving the transaction a value of $210,000. Wolfe was the 
operator of six retail garden centers in Central and West Texas. It spe- 
cialized in selling hybrid pecan trees grown on a company farm in 
Stephenville and claimed to be the largest grower of pecan trees in Tex- 
as. Wolfe also was a wholesaler of live nursery plants, fruit trees, insec- 
ticides, fertilizers, garden equipment, and related items and carried on a 
wholesale mail-order business. 

Why would Tandy buy Wolfe? 

The announcement emphasized that the acquisition placed Tandy into 
"still another major recreational and leisure-time market," and noted 
that the care and maintenance of garden and household plantings and 
grounds had become a popular activity for men and women of all ages, 
particularly in suburban residential areas, as was manifested by the "in- 
creasing number of garden clubs, flower shows and neighborhood 
beautification programs" across the country. Tandy planned an immedi- 
ate expansion of the Wolfe wholesale and mail order operations and the 

firm's founder, would continue to direct operations of the new subsid- 
iary, the announcement said. 

The 15,000 shares issued for the Wolfe Nursery acquisition would 
more than be replenished several months later with the purchase by the 



"I WISH MY FATHER WAS HERE TODAY" 217 

company, in the open market, of 39,600 shares of Tandy common stock 
for its Treasury at an average cost of $14.80 per share. The shares were 
purchased, Charles Tandy said, "to replace the 15,000 shares issued to 
acquire Wolfe Nursery and for possible use in future acquisitions." 
Wolfe Nursery continued as a Tandy subsidiary until February of 1975, 
when it was sold to Pier 1 Imports for approximately $6.5 million. By 
then, the Wolfe Nursery operations consisted of 43 retail stores in 12 
cities in Texas and Oklahoma. 

Wolfe Nursery figured in an amusing incident involving Anne Tandy, 
the wealthy oil and ranching heiress whom Charles Tandy married after 
Owen's death. 

"Anne Tandy knew how to hold onto a dime," Eunice West recount- 
ed. "She used to buy flowers all the time. Once she bought all these 
plants at a Wolfe Nursery after Tandy sold it. She was used to getting a 
10 percent Tandy discount that was offered to Tandy employees and 
shareholders at all the Tandy Corporation subsidiaries. Well, on this oc- 
casion she had bought over $200 worth of plants. She was paying for 
them and wanted her 10 percent discount, and they told her, 'No, we're 
not part of Tandy any more.' So she said, Tn that case, you can take 
'em all back,' and she said to her chauffeur, 'C'mon, let's go some- 
where else.' The nursery people said, 'Oh, no, come back, come back.' 
But she left. Later, she told Charles about it, and he really did kid her." 

A month after the Wolfe Nursery acquisition, Radio Shack directors 
approved a rights offering that would raise funds to retire $4.2 million 
in bank debt and increase working capital. Under the plan, shareholders 
received rights to purchase three additional shares of Radio Shack com- 
mon stock for each share held at a price below the current market price 
of the stock, which was then quoted at $10 bid and $12 asked in the 
over-the-counter market. At the same time, Tandy Corporation an- 
nounced it had agreed to exercise its rights to purchase 808,071 new 
shares of Radio Shack stock, plus all shares not subscribed by other 
shareholders. The shares were purchased in December at a price of $8 
per share, giving the transaction a total value of $6.5 million, the largest 
single transaction in company history. With the purchase of 133,755 
shares to which the rights had not been exercised and another 1,090 
shares from a stockholder shortly thereafter, Tandy's ownership interest 
in Radio Shack stood at 96.2 percent. The remaining 3.8 percent was 
acquired on May 26, 1967, through the issuance of two shares of Tandy 



218 "I WISH MY FATHER WAS HERE TODAY" 

stock for each three shares of Radio Shack stock held by minority 
shareholders. Radio Shack was then liquidated as a separate corporate 
entity and, effective June 30, 1967, was merged into Tandy Corporation 
under a pooling of interests. 

* * # 

Dave Tandy was in Corpus Christi visiting his daughter, Marguentte 
Duemke, when the $6.5 million transaction was announced. Dave never 
forgot the dark days of the Great Depression when he and Norton 
Hinckley were forced to juggle checks to keep them from bouncing. He 
was awed by Charles' financial dealings and still agonized over what 
he feared was his oldest son's propensity for making deals. 

Dave was also painfully aware that his time was limited after suffer- 

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lliii aiiUUlC-l 111 O- OV^ilVO Ui XlVC4.lt CttttAVavo. AJLW X\~>xc ca±v aivj-oj~/j.«-c<.i Uiivi wiv x»^v 

est attack in early December and accepted an invitation from his 
daughter to spend some time at her home enjoying the balmy Gulf 
Coast sunshine and seashore. He hoped he might even be able to get in 
some fishing at his place in Rockport. On December 9, he celebrated 
his 77th birthday. On Wednesday morning, December 21, 1966, he suf- 
fered a fatal heart attack. His body was returned to Fort Worth, where 
funeral services were held on Friday afternoon, December 23, at the 
First Presbyterian Church. Burial was in Greenwood Cemetery in Fort 
Worth. The afternoon of the funeral, offices, plants and stores of Radio 
Shack, Tandy Leather, American Handicrafts and Merribee Embroidery 
in Fort Worth closed in his honor to permit employees to attend the 
services. 

An editorial in the Fort Worth Press eulogized him: 

'The story of Dave Tandy was typical of the American success story, 
a story built of all the qualities that we hold up to our children as good. 

"A Central Texas boy who started from scratch, built small invest- 
ment into big investment, small business into a major nationwide busi- 
ness, Dave L. Tandy was to become part of the rich tradition which we 
claim for Fort Worth. 

"The name Tandy became synonymous with leather in Texas, then 
throughout the United Suites . The stuiy ui success was a tuiiunuuuS 
one, from the Hinckley-Tandy Leather Co., to the Tandy Leather Co., 
to the Tandy Corp. with several subsidiaries. 

"And the distinguished name and tradition is being carried on by an 
able son, Charles Tandy, who now heads the big business he founded. 



"I WISH MY FATHER WAS HERE TODAY" 219 

"When Dave Tandy died, we lost from the scene in Fort Worth a 
leader who was prominent among the group of individualists who built 
Fort Worth and who made it an industrial center to be reckoned with. 

"He has earned a prominent niche in our city's history." 

Jesse Upchurch recalled that Gwen Tandy and Jim and Eunice West 
were vacationing in Mexico City when they learned of Dave Tandy's 
death. 

"They were coming to our home for dinner and then we were going 
to the airport that night to pick up Charles/' Upchurch related. "I had 
lined up a motor coach with a whole Mexican band and all the works to 
go meet Charles who was flying down from Fort Worth. It was some- 
thing we did whenever Charles came to visit us. We'd hire a full maria- 
chi band, would have drinks on board a bus we'd rented, make 
arrangements with customs and immigration so that he walked out of 
the airport like a prince. We'd have the bus waiting right in the front 
and the band playing inside the terminal and follow him to the bus. 
Anyway, I had to go out to do something that night, and when I got 
back they told me that Charles had called to say his dad had died and 
everybody had to go to Fort Worth the next day." 

The depth of Charles' feelings for his father was demonstrated when 
he was honored by the TCU Business Alumni Association with its first 
annual Distinguished Achievement Award at a luncheon at the Fort 
Worth Club on October 26, 1967, attended by more than 200 of the 
city's business and civic leaders. 

During his remarks, Tandy choked up as he recalled Dave Tandy's 
influence on his life. Tears filled his eyes as he said, "I wish my father 
could be here today to see me get this award." 

A newspaperman covering the meeting was seated at a table next to 
one occupied by a group of Tandy Corporation executives. As Tandy 
cried, the reporter noticed there wasn't a dry eye at the Tandy table. He 
later mentioned this to W.H. (Pete) Peterson, the dapper executive vice 
president of the Fort Worth National Bank, of which Tandy was then a 
director. 

"When Charles cries," Peterson quipped, "everybody cries." 

Another tragedy would strike a few months later. 

Shortly after Dave Tandy's death, Gwen Tandy learned she had lung 
cancer. She went to Boston General Hospital for treatment and never 
returned home. She died on April 4, 1967, at the age of 62. 



220 "I WISH MY FATHER WAS HERE TODAY" 

"Gwen Tandy was a very charming person," Eunice West recalled. 
"She and Charles had a real nice life and they had a fun time together. 
She was very businesslike, very smart. She liked to talk to men. She 
liked man talk. She didn't care about getting around a group of women. 
She was good for Charles." 

Gwen Tandy's father-in-law, B.F. Johnston, made his fortune in the 
Los Mochos Valley of Baja California, Mexico. By 1917, he owned 
five sugar mills and decided to build one huge complex. So he designed 
Los Mochos with sugar mills and refineries and built a railroad to serve 
it. When he died, he left a business empire that included banks, an elec- 
tric utility company, a telephone company, a railroad, and a hotel. 

Upon B.F. Johnston's death, his son, Sherwood, whom Gwen married 
in 1923 at the age of 18, became the head of the sugar companies and 
the distilleries. He founded Del Fuerta, the first company in Mexico to 
make ketchup and tomato sauce, which was responsible for the large 
tomato and vegetable markets in Los Mochos. The Johnstons lived 
mostly in Los Mochos, but also had homes in Burlingame, California, 
an estate in Rye, New York, and smaller places in Mexico City and 
Cuernavaca. Sherwood Johnston was killed in an airplane accident in 
1937. 

"B.F. Johnston had connections with banks and was close to the 
Crocker family in California and had strong connections with Conti- 
nental Illinois Bank in Chicago and banks in New York and Boston," 
Jesse Upchurch reported. "As a result, Gwen had solid banking contacts 
around the country, and this was a good connection for Charles in later 
years." 

Gwen accepted the fact that "Charles lived his business," Upchurch 
pointed out. "Charles was never looking for some young woman with 
whom he could raise a family. He knew that would interfere with his 
business. To him business was his relaxation. It was his life. Gwen ac- 
cepted that. She might have been inconvenienced at times, but she ac- 
cepted it." 

When Gwen Tandy moved to Fort Worth after the war, "No one 
knew who she was," her friend, Hazel Vernon, recalled. "And she had 
to learn to put up with the 14 to 15-hour days that Charles immediately 
began putting in. And on Sundays, she would go driving with him 
while he was looking for new store sites. She was a fabulous woman." 

Gwen became involved in the performing arts scene in Fort Worth 
and was a major supporter of the Fort Worth Opera, Fort Worth Sym- 
phony, Fort Worth Theatre and the Reeder School of Theatre and De- 



"I WISH MY FATHER WAS HERE TODAY" 221 

sign for children. She organized the Red Balloon Benefit, a fund-raising 
project for the Scott Theatre, home of the Fort Worth Theatre, and left 
$250,000 to the Scott Theatre in her will to be utilized as a "panic 
fund," according to William A. (Bill) Garber, the Fort Worth Theatre's 
long-time executive director. 

Gwen Tandy's estate, at the time of her death, included three million 
acres of land around Los Mochos, Upchurch revealed. The property she 
owned in Mexico was sold for $18 million. This did not include all of 
the land between Los Mochos and Topolobampo that the family donat- 
ed to the Mexican government. 

Charles Tandy took his father's death hard. But Gwen's death totally 
devastated him. 

"He was absolutely distraught," Dave Beckerman said. "He was in 
tears most of the time. He was just so lost without his wife. He grieved 
very, very deeply. It was a very sad period in his life." 

Beckerman, who was still living in Boston at the time, was given the 
assignment of making the arrangements for Gwen's funeral in Boston 
according to instructions left by her before her death. 

"She had told Charles she wanted balloons and fireworks, and she 
also wanted it all recorded on motion picture film so that her grandchil- 
dren could look at the film and remember her death, not with sadness, 
but as a celebration of going forward to a new life," Beckerman said. 
"She also requested that the music that was to be played was not to be 
funeral dirges, but, instead, were to be songs that were meaningful to 
her and Charles. For example, they had met in San Francisco, so she 
wanted T Left My Heart in San Francisco' to be played by the 
organist." 

The funeral was held in a funeral home in Kenmore Square in Bos- 
ton, which has a park at its center. Beckerman arranged for hundreds of 
large red helium-filled balloons to be released from the park at the con- 
clusion of the services. 

"Then," Beckerman related, "at the last minute, a couple of funny 
things happened. The morning of the funeral, Charles remembered that 
Gwen had requested that fireworks be set off. She wanted a Mexican- 
style funeral with fireworks because she had lived in Mexico a great 
part of her life." This posed a problem. Where do you get fireworks in 
Boston, where they are illegal? 

"So we came up with the idea that the only people who could tell us 
where to get fireworks were the police," Beckerman went on. "We had 
friends in the Brookline Police Department because our Radio Shack 



222 "I WISH MY FATHER WAS HERE TODAY" 

store at 730 Commonwealth Avenue was actually in Brookline even 
though it had a Boston address. Dick O'Brien arranged for a Brookline 
police cruiser to go into Chinatown in Boston and pick up fireworks 
from some Chinese merchants. Then the Brookline Police Department 
arranged with the Boston police, because the funeral was in Boston, 
that at a given time they would turn their backs to the park." 

Beckerman installed men inside the park who were to set off the fire- 
works and cut loose the balloons at his signal as he exited the fu- 
neral home after the services. He also arranged for Jerry Colella, who 
was then a Radio Shack store manager in Boston and would later be- 
come a vice president, to shoot the entire proceedings with a movie 
camera from the roof of the Somerset Hotel overlooking Kenmore 

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when the fireworks went off. 

"He knew nothing about the fireworks, and when I gave the signal 
and they began exploding, Jerry nearly fell off the roof," Beckerman 
said. 

Beckerman accompanied Tandy when he selected the coffin at the fu- 
neral home. 

"Gwen was going to be cremated, so that meant the coffin would be, 
too," Beckerman said. "I saw this terrible funeral home salesman work 
Charles up from an $800 coffin to a $10,000 coffin that was going to be 
burned up anyway. After it got to a certain point, I said, 'You know, 
Charles, I think Gwen would be a lot happier in this very nice $2,000 
coffin if she knew the other $8,000 was donated to the Cancer Fund for 
cancer research.' Charles agreed and that's what was done. 

"The fellow from whom we got the balloons found out from the 
newspapers that this was a wealthy Texan that was being buried. And 
all of a sudden, the price of the balloons went up from $2 a balloon to 
$10 a balloon, and there were going to be 300 balloons. And he insisted 
upon a check. So I made out a check at $10 per balloon and I told him, 
'You be at the funeral, and as soon as the balloons go up, I'll hand you 
the check.'" 

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Shack controller, to call the bank and stop payment on the check as 
soon as the balloons were loosed. That afternoon, the balloon supplier 
called Beckerman. 

"What do you mean by stopping payment on the check?" he 
demanded. 



"I WISH MY FATHER WAS HERE TODAY" 223 

Beckerman then told him, "Our deal was originally $2 a balloon. 
That means the check should be for $600 instead of $3,000. I'll be very 
happy to give you a check for $600 or you can take me to court for the 
$8 a balloon, and I'll be happy to let the people of Boston know what 
kind of a ghoul you really are." 

The man settled for $2 a balloon. 



Chapter 15 

A Dream Fulfilled 



The Forest Park Bowling Lanes on the second floor of the Tandy 
Mart at 505 South University Drive in Fort Worth were comfortably 
filled with Friday night patrons on May 26, 1967. Tony Moore, a 17- 
year-old clerk at the bowling establishment, was sitting at his desk idly 
paging through a magazine when, at about 10:30 p.m., a small boy 
rushed up and screamed excitedly, "There's a fire in the restroom." 

Seizing a fire extinguisher, Moore ran to the restroom, but was driven 
back by- the flames which were now moving towards the corridor. He 
raced back to the bowling alley, where about 100 patrons were gath- 

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cash box, tore down a flight of stairs and ran outside onto the crowded 
parking lot. 

The first alarm was received at the Fort Worth Fire Department at 
10:34 p.m. There would be three additional alarms, and eventually 20 
pieces of equipment, including two cherry pickers, and 70 firemen 
would be on hand battling the blaze. Before it was brought under con- 
trol shortly before midnight, the fire destroyed the bowling alley and 
caused severe smoke and water damage to the Tandy Mart. The mart, 
which opened in April 1962, now housed Tandy Crafts, Tandy Leather 
and Radio Shack retail outlets, plus an aquarium, coin/stamp center, an 
import store and a carpet store. Damage to the building, merchandise 
and equipment was estimated at $500,000. 

Shortly after the fire trucks began converging on the conflagration, 
the telephone rang in Charles Tandy's apartment on Curzon Street in- 
terrupting a dinner party in progress. 

The caller, a Tandy employee, gasped out the news breathlessly, 
"There's a fire at the Tandy Mart." 



225 



226 A DREAM FULFILLED 

Tandy's dinner guests that evening were Charles Tindall, then vice 
president and treasurer of Tandy Corporation; Mrs. Tindall, and a 
young man named John V. Roach whom Tindall was trying to recruit to 
head Tandy's Data Processing Department. Roach, at the time, was the 
data processing manager of Texas Consumer Finance Corporation in 
Fort Worth. 

"Tindall had contacted me about coming to work for the company," 
Roach recalled. "Even though I was from Fort Worth, I didn't know too 
much about Tandy Corporation, which in 1967 had a good image but 
not a real high profile. I told Tindall I was thinking about going to work 
for another company, but that I'd be glad to come out and talk to him. 
Tindall did a great job of selling me on why I ought to go to work for 
Tandy Corporation. I told him I was interested, but that I was going to 
have to make a decision on another job offer soon and that I needed to 
move forward rather quickly. So, all of a sudden, the phone rings and 
I'm invited to Charles Tandy's apartment the following Friday night for 
dinner. When I got to the apartment, the Tindalls were the only other 
guests. This was not long after the death of Charles' first wife." 

The dinner party has remained vivid in Roach's memory. 

"I was 28 years old and I'd had only a few job interviews before that, 
and they all had been career- structured, very professional. But with 
Charles there was quite a bit of talking, a lot of it not terribly to the 
point. We started talking about 7 o'clock and we sat down to dinner at 
8:30. There was talk about my ambitions, what did I hope to do over 
the long term, things like that. One of the things I recall I said that night 
was that I believed that if I made good progress and worked hard and 
contributed in the way that I felt like I was capable of doing, that by the 
time I'd been with the company for 10 years I'd be making $30,000 a 
year." 

Over the ensuing years, Roach added with a grin, "Tandy never let 
me forget that statement." 

The interview was still going on over after-dinner drinks when the 
telephone rang to bring Tandy the news that the Tandy Mart was on 
fire. Tandy, the Tindalls, and Roach jumped into Tandy's Cadillac and 
drove down the West Freeway to University Drive. 

"The traffic was all stacked up because of the huge fire, so we pulled 
off, drove through Trinity Park over curbs and through the grass, and 



Right, Dave L, Tandy, co-founder with Norton W. 
Hinckley of the Hinckley-Tandy Leather Company, 
forerunner of today's Tandy Corporation, The firm 
opened for business in Fort Worth, Texas, in 1919. 




Right, Charles D, Tandy joined his father, Dave L„ 

Tandy, in the family business upon his return from 

active duty with the LL S. Navy during World War 

n. He became the driving force behind the 

dynamic growth of Tandy Corporation. 



Right, gathering of 

Hinckley-Tandy Leather 

Company employees, 

circa 1950. Norton W. 

Hinckley is seated front 

row, left; Dave L. Tandy, 

front row, right; Charles 

D, Tandy, second row, left. 




Above, interior view of a Hinckley-Tandy Leather Company 
store. The business sold sole leather and other shoe 
repair supplies to shoe repair dealers in Texas. 



Right, interior of an early H 

Radio Shack store in Boston, P| 

Customers were primarily 

ham radio operators and |j 

electronics buffs, 




Right, former Radio Shack 

Corporation headquarters in 

Boston,. The near-bankrupt 

firm, founded in 1921, was 

acquired by Tandy Corporation 

in 1963„ 



Right, 1970s-era 

Tandy Corporation 

executives, left to 

right, James L„ West, 

John A. Wilson, and 

Charles D. Tandy, 




Above, Tandy Corporation headquarters on West 7th Street in Fort Worth 
prior to opening of the Tandy Center downtown in 1978. 



Left, Charles and Anne 
Tandy break ground for 
first phase of construction 
of Tandy Center on 
July 9, 1975. 




Left, Tandy shares a laugh at Tandy Center 
opening with Larry Cole, left, of the 
Dallas Cowboys and entertainer 
Lola Falana. 




Above, first grade class at Daggett Elementary School in Fort Worth, circa 1924„ Charles Tandy is seated 
first row, second from right. 




Above, Charles Tandy, left, and Gwen Tandy, right, with Jessie and Connie Upchurch and the Upchurch 
children, Kenneth, Jesse, Jr., and Gwendolyn, at the Upchurch 's home in Rye, N.Y., Christmas 1959. 




Above, Tandy .receives honorary Doctor of Laws 
degree from Dr, James L„ Moudy, chancellor of Texas 
Christian University, at commencement exercises, 197L 





Above, Tandy throws out first ball at opening 
of Texas Rangers baseball season. Left, Brad 
Corbett, majority owner of the Rangers. 



Left, larger-than-life statue of Charles D, Tandy, 
unveiled April 15, 1981 near Tarrant County 
Courthouse in downtown Fort Worth. 



Left, night view of Tandy 
Center towers,, 




Left, view of Tandy 
Technology Center, 
270,000-square foot 
research and development 
facility, opened 
September, 199 L 



A DREAM FULFILLED 227 

we finally got around to the front of the burning building," Roach 
related. 

A newspaper reporter at the scene spotted Tandy and asked him if the 
mart was insured. 

"I hope so," Tandy answered. 

"We stood around for an hour or so watching the firemen put out the 
blaze," Roach recounted, "and then Charles said to Tindall, T wonder if 
we are insured?' And Tindall said, Tm sure we are, but I just can't 
quite remember for sure.' 

"So we all piled back into the car and drove down to the company of- 
fices on West 7th Street. By now it was nearly midnight. Tindall pro- 
ceeded to look for the insurance policy, while Charles paced the floor, 
blowing smoke and encouraging him to hurry and telling him he 
couldn't believe that he didn't know whether they were insured or not. 
Periodically, there would be interspersed discussion about my potential 
job with Tandy. Finally, we got back to Charles' apartment and stood in 
the yard talking some more. I got home at 2 in the morning." 

When he arrived home, Roach was met by his wife, Jean. 

"Jean could not understand where I had been," Roach continued. "I 
had told her I'd be home by 10 o'clock at the latest. It turned out that 
there were a lot of nights that I wasn't home after that, but at least by 
then Jean understood the ball game. But now she was pretty curious 
about what I'd been doing and appeared pretty dubious when I told her 
about the fire. So to prove that the mart had been on fire, we put our 
daughter, Amy, who was then 6 months old, in the car and I drove Jean 
down for a first-hand look." 

Roach had found himself thoroughly fascinated by what he called his 
"seven-hour experience of nonstop Charles Tandy." The following 
Monday morning, he called Tindall to inform him that he was inter- 
ested in going to work for Tandy Corporation but that he had another 
job offer he had to act upon. Roach asked Tindall, "What are you going 
to do?" 

Tindall's reply was, "Charles can never make up his mind on a per- 
sonnel matter this quickly. I'll do what I can. But I just can't tell you 
how fast he'll move." 

Several days later, Roach was invited to have lunch with Jim West, 
now the president of Tandy Corporation. "He took me over to the Pig 



228 A DREAM FULFILLED 

Stand across the street from the Tandy offices and he talked about the 
company," Roach recalled. "Of course, I was trying to talk about com- 
puters and he was trying to talk about the leather business, so I was 
never quite sure how well we totally communicated. But before the 
week was over, in what I later learned was an uncharacteristically short 
time period, they did offer me a job. I was to come to work at the end 
of the month. 

"Maybe this says something about Charles' management style," 
Roach added, "but for the entire month I didn't hear from anybody. So 
on the Friday before I was supposed to go to work, I called Charles 
Tindall and asked him what time I was supposed to come to work, 
where my office was going to be, and what I should do when I came in 
on Monday morning?" 

Tindall responded, "Just come in whenever you want to. I'm sure 
your office will be down where the feller that's been the running the 
Data Processing Department now is. But Charles hasn't told him yet 
that you're coming." 

Between Friday and Monday, Roach related, "Charles had to face the 
reality of dealing with the situation and trying as hard as he could to 
salvage the person I was replacing. But the person decided to leave." 

During his first days on the job, Roach found himself nonplussed 
over the loosely-structured management style that prevailed at the 
Tandy corporate headquarters. 

"It certainly seemed unorthodox to me," he said, "and I think it came 
as a little bit of a shock. After I'd been on the job for a while, I finally 
asked who my boss was. And the answer I received was, 'Well, any- 
body that asks you to do something is your boss.' And, as time went 
along, I even had to try to figure out who handled my pay situation. 
That's the person you usually figure is your boss. The bottom line was 
that I had the same base pay for the next six years, never one cent of in- 
crease. And, as time went along, I learned that Charles was the boss 
and that he made most of the decisions." 

John Roach began his career with Tandy Corporation on June 26, 

Tandy's apartment. 

"Charles had asked me what I'd like to become in the company when 
he interviewed me," Roach recalled. "I said I'd like, after an appropri- 
ate period of time, to be something like comptroller of the corporation. 



A DREAM FULFILLED 229 

I thought maybe I had that much potential. After Charles' death, it al- 
ways seemed that I was destined for one of the leadership roles, but I 
wasn't sure it would be this." 

He never dreamed he would one day sit behind the same oversized 
desk in the same mammoth office overlooking downtown Fort Worth 
that Charles Tandy once occupied. He was born in Stamford, Texas, 
and lived there until he was 4 years old when his father, who had oper- 
ated a meat market in the small west Texas town, moved to Fort Worth 
and took a job with the U.S. Department of Agriculture as a meat in- 
spector. "This was during World War II, when they put controls on 
meat, and dad couldn't get enough to support his business in Stam- 
ford," Roach explained. 

Roach grew up in the Riverside area of northeast Fort Worth and 
graduated from Carter-Riverside High School. He entered Texas Chris- 
tian University on a partial academic scholarship and worked at Mont- 
gomery Ward unloading boxcars in the summer and ran a freight 
elevator at night during the school year. One summer he roughnecked 
in the South Louisiana oil fields. Between his junior and senior year, he 
worked for Southwestern Bell Telephone Company as an engineer- 
trainee helping plan where to erect telephone poles. 

Roach remembered someone telling him while he was at TCU that 
one day he could make as much as $12,000 a year as an engineer. 
"That sounded pretty good," he admitted. "I was convinced I could 
make that some day" 

His first job after graduating in 1961 with a degree in physics and 
mathematics was as a general engineer at the Pacific Missile Range in 
California at an annual salary of $6,345. He remained there two years. 
"It seemed to me that I needed more engineering education or a busi- 
ness education to get into management," he recalled. "Meantime, I had 
married a Fort Worth girl and both of us were eager to get back home. 
So I enrolled in the TCU School of Business for an MBA." 

Both he and Jean worked while he attended graduate school. During 
his first year, Roach worked in the TCU computer department, where 
he received his introduction to computers. The next year, he worked at 
the General Dynamics plant in Fort Worth. 

"I knew that I didn't want any part of the defense industry, so I start- 
ed looking for another job locally," Roach related. "As a result of hav- 
ing gotten into computers at TCU, I finally landed a job as data 



230 A DREAM FULFILLED 

nrnppccina msnsaer for Texas Consumer Finance Corporation m 1965." 
After two years there, Roach decided to make a change. "Somehow/' 1 
he recalled, "that information mysteriously got to the people at Tandy, 
and Charley Tindall called me at home one night and asked if I'd like 
to come to Tandy as head of the Data Processing Department." 
It would turn out to be a call that changed his life. 



Roach couldn't have picked a more eventful time to join Tandy. The 
company was moving ahead on so many fronts that it was hard to keep 
up with the announcements that seemed to pour out of Fort Worth 
headquarters in a steady stream. 

Shortly after his arrival on the scene, rumors began circulating 

n *w.*-*,4 TT™-f Wr»r+V» flnof o Vi1*-\r«l4Ynetj»r c*r»nnicifmn ^nnminrpmpnt W3S in 

the works that would stun the city. Tandy stock began responding with 
sharp price increases. On October 1, 1967, Tandy shot up 4% points 
in heavy trading, closing at $39 a share. 

At the request of the New York Stock Exchange, Bill Michero, cor- 
porate secretary, issued a statement: "Conversations are in progress 
with several companies looking toward an acquisition which would ex™ 
pand the national operations of Tandy's Radio Shack Division and add 
new operations to the company. We expect to be able to confirm the 
success or failure of our current negotiations within about a week." 

On Monday, October 16, Tandy stock closed at $42.50 a share, an 
all-time high, up $1.75 from its Friday closing price. 

The much-awaited announcement leaped off the front page of the 
Star-Telegram on October 17, 1967, in bold, black headlines: "Tandy 
Buys Leonards." 

It was the talk of the town. 

For Charles Tandy, who once had worked in the shadow of Leonards 
Department Store downtown, it was the ultimate ego trip, the culmina- 
tion of a dream he had harbored since childhood. 

When Charles was growing up, Leonards had been the place where 
everybody shopped for the best bargains in town on everything from 

" . ^ ■ , t 1 i r^i 1~~? xt. ,-.— 1,-« J 

groceries IU ldXlll equipment, bcunama wao wnui^ uiiuiivo iiivstii.vx imu 

taken him to buy blue jeans for school and dress up clothes for Sunday 
School. During his lifetime, Leonards had been the dominant name in 
Fort Worth retailing. Its owners, Marvin and Obie Leonard, were prom- 



A DREAM FULFILLED 231 

inent members of the powerful Citizens Committee, an elite group of 
downtown businessmen, bankers and lawyers who epitomized the es- 
sence of the Fort Worth Establishment. 

It had always galled Charles that Dave Tandy had never been asked 
to join the Citizens Committee which, for all practical and political pur- 
poses, had run Fort Worth from the 1920s to the 1960s until the advent 
of single member city council districts drained it of its power base. So 
buying Leonards was another way for Tandy to thumb his nose at the 
power brokers who had snubbed his father. 

The rise of Leonards from a hole-in-the-wall grocery store to a mam- 
moth downtown retail complex was in the best Horatio Alger tradition. 
Marvin Leonard opened his grocery store on December 14, 1918, in a 
25-by-60-foot building he rented for $75 a month at 111 Houston Street 
across from the Tarrant County Courthouse. His total capital was $835, 
most of it borrowed. With it he acquired as much merchandise as his 
limited resources allowed. For counters, he used boards that lay across 
barrels. His display cases were washtubs. But at the end of his first day 
in business, he counted up receipts of $195.26, a sum that seemed to 
him like "all the money in the world." He was on his way. 

On November 2, 1919, Obie Leonard, who had been working as a 
mechanic in a Dallas garage, joined his brother in the store. Soon after 
that, after considerable agonizing, they decided to expand into a general 
merchandise business. They began by adding furniture and hardware, 
then drugs and softwares. 

Their slogan was "More merchandise for less money," and they lived 
up to it. Over the years, their merchandising feats became legends. 
Once they bought 2,000 dozen pairs of fire-engine red pants from a 
manufacturer who practically gave them away to get them out of his in- 
ventory. Leonards then sold the pants at a giveaway price of $1 a pair. 

Recalled Fort Worth attorney Jenkins Garrett, who represented 
Leonards as general counsel for many years, "For weeks after that, ev- 
erybody in Fort Worth was walking around wearing bright red pants." 

The first Leonards store was outgrown within two years. The 
Leonards added 15 feet next door, then 25 feet, then a two-story build- 
ing. In 1930, they moved into their own new building a block away. 
This building, occiipying a full city block, became the hub of their fur- 
ther expansion that included a full-line service station, a complete farm 



232 A DREAM FULFILLED 

e*vw* p ctmprm«rVpt «n outdoor store used furniture store, home im- 
provement center, and an auto and boat store. Leonards also offered 
free parking to its customers on a 14-acre parking lot that was located 
about one-third of a mile from the main store and from which it oper- 
ated a free bus service. 

During the Great Depression, Leonards stepped into the void caused 
by the 1933 Bank Holiday. It printed its own scrip, so that cash- 
strapped wage-earners had a place where they could cash their pay 
checks and buy groceries and other necessities at the store. 

"During the Bank Holiday," said Robert W. Leonard, Obie Leonard's 
son, "people didn't have a place to cash their pay checks. Leonards 
printed its own scrip and cashed the checks. Say it was a $25 check, 
they'd give the guy $5 in cash and the rest in scrip and he could use the 
scrip to buy anything in the store. Before it was over, I think some of 
the other merchants began honoring the scrip. They were real innova- 
tors," he said of his father and his uncle, Marvin Leonard. "If they'd 
have had the gall to expand, they'd have been the Sam's of today." 

When the Tandy Leather Company moved uptown to 2nd and 
Throckmorton Streets in 1952, it became a neighbor of Leonards, 
whose main store occupied the entire block catty-corner across Throck- 
morton from the Tandy Leather 50-foot storefront. The sprawling 
Leonards complex loomed larger and larger in Charles' eyes as he 
passed it every day going to and from work. One day, he promised 
himself, all that was going to be his. 

He made his first attempt in 1959, Bill Michero recalled. 

"We were still officing at 2nd and Throckmorton. One afternoon, 
Charles called to me to come over to his desk. Luther Henderson was 
already there. He told us he was going over to see Obie Leonard about 
buying Leonards and he wanted us to go with him. So the three of us 
walked over to Mr. Obie's office." 

After a few minutes of pleasantries, Tandy came straight to the point. 

"Mr. Obie," he said, "would you like to sell Leonards?" 

Leonard, a man of few words, responded with his usual taciturnity, 
«T^„ u„„,~ <mo ^iii; rt «9» 

"No, I don't." 

"Well, come back when you do." 

"I hope I can." 

The entire meeting, Michero recalled, took less than five minutes. 



A DREAM FULFILLED 233 

"Then," he said, "we walked back across the street and went back to 
work." 

In early 1963, Leonards made history by opening the world's first 
electric underground subway system owned by a department store. The 
$2 million railway system connected the store's 14-acre, 5,000-car 
parking lot with a huge underground shopping center that was built in 
the basement of the main Leonards store. Five electric cars, former 
Washington, D. C. street cars with a capacity of 100 passengers each, 
operated on two tracks at depths of up to 42 feet beneath the surface of 
downtown Fort Worth, whisking riders to and from the store at speeds 
of up to 30 miles. Not only was it an exciting ride. It also was free. 

In a skit in the annual Gridiron Show that year produced by the Fort 
Worth Chapter of the Society of Professional Journalists-Sigma Delta 
Chi, an actor portraying Marvin Leonard was interviewed by another 
actor playing the role of a reporter. 

"How much do you charge people to ride on your subway?" the re- 
porter asked Leonard. 

"There's no charge," Leonard replied. "The Leonards subway is 
free." 

"How can you make any money that way?" the reporter persisted. 

"You'd be surprised." 

Leonard's answer drew an appreciative guffaw from the audience. 

With the opening of the subway and a new three-story building cov- 
ering an entire city block adjacent to the main store, the Leonards re- 
tailing complex had grown to 86 departments occupying more than 
500,000 square feet that sprawled over six city blocks on the north end 
of downtown Fort Worth. 

This was the Leonards that Tandy continued to covet. 

In the meantime, Charles had become a close friend of the older of 
Obie Leonard's two sons, Paul. "We used to visit," Paul Leonard re- 
called. "I used to go over to the Tandy Leather store and visit with 
Charles and Jim West and Luther Henderson. We were neighbors and 
friends. That's my earliest recollection of Charles. He was older than I. 
We went to the same high school, but he graduated in 1936 and I grad- 
uated in 1942, so I didn't know him when we were growing up." 

In 1964, Marvin and Obie Leonard had severed their longtime part- 
nership to devote themselves to their separate interests. None of Marv- 
in's four daughters was interested in running the department store, 



234 A DREAM FULFILLED 

while Obie's sons, Paul and Bob, continued to be active in the store's 
management. In 1965, Marvin Leonard's half ownership in Leonards 
was acquired by the Obie Leonard family. 

On May 28, 1965, Paul Leonard, who now held the title of president 
of Leonards, was elected a director of Tandy Corporation. Paul Leonard 
had been aware of Charles' continuing interest in acquiring Leonards 
when he joined the Tandy board, but the issue lay dormant until the 
summer of 1967. 

"We had decided that we'd like to sell the store," Leonard revealed. 
"We were in several different businesses by now and our resources 
were not such that we could grow them all. Financing Leonards tied up 
a lot of capital because the receivables were between $8 million and 
$10 million. We were now in the insurance business, the real estate 
business, the farming business, and the oil and gas business. Really, we 
were a little conglomerate. And to make the retail business grow de- 
manded all of our assets." 

In addition, Leonard went on, "We were late in going suburban with 
the department store, eight or ten years late. We were not in the fore- 
front of that. We had chosen to stay downtown and we had a very large 
real estate investment downtown. But the compelling reason we decid- 
ed to sell Leonards was we didn't have the resources to expand the 
business in the way we thought it should." 

Leonard said he approached Tandy after a board meeting to deter- 
mine if he was still interested in buying Leonards. "I told Charles that I 
thought Leonards would be available if he still wanted it, and he said 
that he was interested. Tandy was the logical choice to buy the store," 
Leonard continued. "Not only was he in an acquiring mode at the time, 
he had the creativity and the ingenuity to raise the money to do it." 

Negotiations began in earnest. "It became a matter of looking at the 
numbers," Tandy later recalled. 

Since Leonards was a privately-held company, its balance sheet and 
earnings had never been published. Looking over the P&Ls, Tandy re- 
ceived an insight into the successes and rough spots of the Leonards 

the construction and operation of the subway, which had cut deeply 
into earnings. 

Initial discussions were built around the idea that Tandy would pur- 
chase the Leonards real estate, as well as its name, stock and fixtures, 
but it soon became apparent that this would involve more money than 



A DREAM FULFILLED 235 

Tandy could readily handle or was willing to commit. Another stum- 
bling block was Charles' almost paranoid antipathy to owning real es- 
tate. The proposal then narrowed down to the purchase of the business, 
its stock and fixtures, with the Leonards retaining the land and build- 
ings and leasing them to Tandy. 

A snag then developed over the question of receivables. Under the 
original proposal, the receivables of approximately $10 million were to 
belong to the Leonards for a number of years, with Tandy taking over 
the collections. But Charles demurred after a study of the numbers con- 
vinced him that such an arrangement was unfeasible. For a while the 
entire deal was in jeopardy, but Tandy eventually wrung a concession 
from the Leonards and the receivables became a part of the package. 

Clifton O. Overcash, who was a Leonards executive at the time and 
was later named president of Leonards by Tandy, was convinced that 
Tandy wanted to own the receivables so that he could convert them into 
immediate cash to finance the purchase. 

"The only way Tandy was able to buy Leonards was to sell the re- 
ceivables, which he did to Transamerica Credit Corporation, a subsid- 
iary of Transamerica Life of San Francisco," Overcash said. "Charles 
sold the whole deal to Transamerica and they took over the credit." 

When the deal was announced at a press conference at the Worth Ho- 
tel in downtown Fort Worth, many people couldn't believe it, Harlan 
Swain, then the head of the Tandy Leather and American Handicrafts 
Divisions, recalled. 

"The public was absolutely incredulous when the announcement 
came out that Tandy had bought Leonards," he said. "People thought a 
mistake had been made, saying: The Star-Telegram never gets any- 
thing right. I'm sure what really happened is that Leonards bought 
Tandy. Tandy couldn't buy Leonards.'" 

At the press conference, Charles Tandy and Paul Leonard announced 
that Tandy Corporation was purchasing the business and merchandising 
assets of Leonards Department Store for cash and stock totaling in ex- 
cess of $8 million, with the actual amount determinable as of the end of 
October 1967. Tandy would lease the underlying real estate from the 
Leonards. Also included in the purchase was control of a chain of six 
Mitchell's junior department stores located in the Fort Worth area. 

The price that Tandy wound up paying for Leonards was approxi- 
mately $8.5 million, of which $7 million was in cash and the remainder 
in Tandy stock. 



236 A DREAM FULFILLED 

"Mr. Obic realb' didn't want to take an v stock " recalled Charles Rin- 
gler, who was Leonards public relations manager, "but that was the 
only way the deal could be made. So he agreed." 

One of the first things the Leonards did after the sale was closed was 
convert their Tandy stock to cash. It turned oxxt to be a costly mistake, 
in light of the continued rise in the price of the stock and the stock 
splits that followed. 

"The reason we sold the stock was that we thought Tandy was a 
one-man show," Paul Leonard said. In retrospect, he added, "It was a 
dumb thing to do. But it's easy to have 20-20 hindsight vision." 

Charles Tandy called the Leonards purchase "the largest single acqui- 
sition ever undertaken by Tandy Corporation," and noted that it would 
add over $45 million in annual sales and approximately $i million in 
after tax net income to Tandy's consolidated operations. He told the 
news media that "over 98 years of experience and sales of over $100 
million this year are brought together by this transaction," and added 
that the move "is in keeping with Tandy Corporation's basic objective 
of a three-fold increase in sales and earnings every five years." 

Tandy then added a personal note. 

"For 10 years, our store was across the street from Leonards. Sure, 
we took the location because that was where the traffic was. But 
Leonards pulled them in and we didn't. Leonards seemed to have some 
kind of magnet that just pulled in everybody that came near that store." 

What he didn't say, one of the reporters would write, "was that even 
though he eventually moved away from downtown Fort Worth to a new 
location on West 7th Street, he never forgot that magnet. He never 
stopped dreaming about it. And, finally, the magnet got him, too." 

When asked by a newsman why he had decided to buy Leonards, 
Tandy replied, "Leonards is actually something over 80 different stores 
selling under one name. If we find, as we expect to find, that some of 
the departments that make up the different stores under the same sign 
have been so operated that they are meeting the needs of the consumer 
profitably, it may well De mai triose Gepanxnenis win dccghic me nucle- 
us of new chains." 

Tandy welcomed the 1,800 Leonards employees witu worus aoout ms 
philosophy of doing business. 

"You must have a willingness to share with the people in the com- 
pany," he said. "The people who work for Tandy are a new breed, filled 



A DREAM FULFILLED 237 

with the incentive that comes from knowing that the name of the game 
is to make a buck." 

Billy Roland, who was assistant secretary and assistant treasurer of 
Tandy Corporation at the time of the acquisition, offered his thoughts 
on Tandy's motivation for buying Leonards. 

"What Charles wanted was merchandise that he could put into a na- 
tionwide store operation. He knew retailing and he understood buying 
power concepts of concentration of goods and then dispersing it out 
through the store system. And he was looking for merchandise that 
would really sell. That's why he bought Leonards. He saw all those de- 
partments in Leonards and he was looking for a way to take any one of 
those departments or the merchandise out of one of those departments 
and put it into a chain of stores across the country. Of course, that 
didn't work out, and Leonards was never profitable after we acquired it. 
But that was his idea." 

Harlan Swain added, "Charles professed to see a great opportunity in 
Leonards. The way he put it to me was that in a department store you 
have every line of business there is. So, therefore, ergo, if you have a 
department store and you are a specialty retailer who knows how to do 
specialty retailing, you can take this department store and observe each 
one of its departments and determine which ones you can take and use 
as a base to establish chains of specialty stores nationwide. This was his 
theory. He felt like you could take a fabric department of a department 
store and apply to it the principles of specialty retailing and it can be- 
come a chain of fabric stores. And you know, there are chains of fabric 
stores today. That was his theory, even if it didn't work out." 

But, in Swain's opinion, even though the Leonards acquisition never 
lived up to Tandy's expectations, he did gain one great plus out of the 
venture. 

"What Tandy Corporation really got out of buying Leonards was the 
publicity. Nobody, even the people in Fort Worth, knew anything about 
Tandy until after the Leonards acquisition. Tandy was the world's 
best-kept secret. Suddenly Tandy Corporation was in every newspaper, 
every TV newscast, was nationally-known, just overnight. It exploded 
into public consciousness in a way that I don't think you could have 
done any other way. So I think that's the biggest thing Tandy got out of 
the Leonards acquisition, because it certainly wasn't profitable on the 
basis of P&L." 



238 A DREAM FULFILLED 

* & # 

The fact that Tandy permitted himself to be influenced by something 
other than Leonards' profit and loss statement was, in John Roach's 
view, quite extraordinary. 

"P&Ls, the profit and loss statements, were the absolute Bible of the 
company," Roach averred. "Each month, Charles eagerly awaited their 
coming out of the accounting department. They were widely dissemi- 
nated, everybody got a copy. He relished getting his a few hours before 
everyone else, so that he could call you up and ask you a question that 
you wouldn't be able to answer because you hadn't received your state- 
ment yet. This caused all of his people to become focused on the P&Ls. 
One of the ongoing challenges was did he, in fact, know more than you 
knew? But that inspired you to just want to try to know something that 
he didn't know. But you were always amazed at the number of things 
he knew or that he could deduce. If there was one wrong number in the 
middle of a report, he'd find it." 

About a year-and-a-half after Roach joined Tandy Corporation, the 
P&Ls figured in an interesting confrontation he had with Charles 
Tandy. "It showed me a little bit about Charles' very incisive thinking," 
Roach recalled. 

"We had decided that we'd put the P&L statements on the computer 
because the number of stores was increasing so rapidly. We were prob- 
ably getting up to close to 300 Radio Shack stores by this time. It was 
taking more and more time to consolidate all of the P&L statements, 
and we were getting errors as a result of the growing number of consol- 
idations. The whole procedure was getting to be very difficult. So we 
did the computer programming and set up the accounting system so that 
we could run the P&Ls on the computer. And the accountants, all of 
whom had been exposed to Charles a lot longer than I had, unanimous- 
ly decided that I was the logical person to tell him about it. 

"So, after a meeting one day, I caught Charles and I said, T'd like to 
talk to you about the P&Ls. You know, there are beginning to be prob- 

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is a problem.' I was trying to sell hard because I wasn't real sure that 

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much like computers, anyway. So, in my sales pitch, I finally said, 
'You know, Charles, I think we can assure ourselves, as we go down 



A DREAM FULFILLED 239 

the road, that we'll get the P&Ls out three days sooner if we do them 
on the computer.' 

"He stopped for a minute and he looked over his glasses and blew a 
puff of smoke from his cigar, and he said, 'We've got a store in 
Bakersfield, California, that I've known has been losing money for 
three months. And if you'd gotten the P&Ls out three days sooner, I 
would have known for three months and three days it was losing mon- 
ey. Hell, Roach, it doesn't make any difference when you get the infor- 
mation out. It's what you do with it after you get it.'" 



Chapter 16 

A Lingerie Department Loses 
Its Panties 



The same irresistible urge that drove Tandy to buy Leonards now 
manifested itself in his desire to run Leonards — his way. Almost before 
the ink was dry on the purchase contract, he began drawing up plans to 
go suburban. 

"Let's face it," he told a reporter, "the trend is toward branch stores." 

He began making changes that altered the complexion of Leonards. 
This turned out to be a major mistake. 

"Leonards was one of a kind, a unique entity, a big tent," Harlan 
Swain pointed out. "Marvin Leonard had prided himself on the fact that 
if you couldn't find it at Leonards, you couldn't find it anywhere. 
Leonards had grown up as a special kind of animal that had everything 
in stock." 

Tandy, on the other hand, with his specialty store orientation, viewed 
every department as a profit center. 

Charles Ringler recalled, "If some things in a department didn't sell 
fast enough, he got rid of them. You can't do that in a department 
store." 

Ringler cited women's panties as a classic example. 

"If panties weren't selling, Charles' approach was to say, 'Let's quit 
stocking panties.' That's what he'd do with a transistor that wasn't sell- 
ing in a Radio Shack store. But you can't have a ladies' lingerie depart- 
ment that doesn't carry panties. Charles never quite understood this." 

Added Swain, "Leonards had grown and prospered on what to 
Charles, as a specialty retailer, were ridiculously thin gross margins. 
And, of course, one of Charles' great obsessions was gross margins, 
high percentage gross margins. Leonards had been more interested in 
sales and gross margin dollars than in gross margin percentages, and 
they are not the same. You can have wonderful gross margin percent- 

241 



£t± A LINGERIE DEPARTMENT LOSES ITS PANTIES 

qctpc:" hut if vnn rzm't aet the, sales if doesn't mean a thin a. Charles 
thought that the same principles of high gross margins and high turn- 
over rates should be able to be transferred right out of Tandy Leather 
and Radio Shack into a department store." 

It proved to be wishful thinking. 

"Charles had done it with Tandy Leather," Swain said in Tandy's de- 
fense. "He had discovered that the margins that Hinckley-Tandy lived 
with in their line of business could be enhanced tremendously. If that 
were the only company he did it with, it could be suspect to say it could 
be done elsewhere. But he also had done it at Tex Tan, where they had 
achieved great margins. And he had done it in Radio Shack. And, cer- 
tainly, Radio Shack merchandise had been competitive and had been 
low margin. But he was able to take it and jack those margins up tre- 
mendously, not just by upping the price, but through merchandising and 
selection. So who could blame him for thinking he could do the same 
thing at Leonards?" 

Perhaps, Swain mused, he could have done it by bringing in other 
people. "Department store people have a mindset to do business in a 
department store way," Swain observed. "Now, if Charles had replaced 
everybody in management with specialty retailing people, maybe it 
would have worked. But he didn't do it that way, and the way he did it 
didn't work." 

Leonards came under Swain's aegis when he was elected a vice pres- 
ident of Tandy Corporation in 1970. He continued in that role until 
1974, when Leonards was sold to the Dillards Department Store chain 
of Little Rock, Arkansas. 

One of Tandy's first moves after taking over Leonards was to ask 
Paul Leonard to stay on as president and chief executive officer. But, 
by Leonard's own account, Clif Overcash really ran the store from the 
very outset until 1972 when Overcash resigned. 

"I didn't want to have line responsibility for the running of the store," 
Leonard said. "And Charles' relationship was one of supervising Clif, 

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apartment. Charles was a figure guy and he wanted increased gross 

piuiiio li^iit away. 

Leonard discovered very quickly that Tandy's management style was 
a far cry from the paternalistic, benevolent Leonards operation. 

"Our philosophy, Uncle Marvin's and my dad's philosophy, was that 
the department managers were pretty much in business for themselves, 
and they gave them a lot of autonomy to do the things they thought 



A LINGERIE DEPARTMENT LOSES ITS PANTIES 243 

they needed to do to make money. So there was a loss of that freedom 
with people. I think it was a shock to the 70 or 80 management people 
to get into a less people-oriented environment. 

"Charles really didn't have the time to be in day-to-day contact with 
the store employees, as we did. We knew these people, we knew how 
many children they had, we knew the problems they were having. They 
were our friends and we loved them like we would members of our 
family." 

Added a long-time Leonards employee, "They didn't pay us any- 
thing, but they treated us like family." 

Paul Leonard became immediately aware of Tandy's displeasure with 
Leonards' margins and operating practices. 

"Charles, being a figure man, really looked at printouts of inventories 
and turnover, and he didn't like what he saw," Leonard said. "But one 
of the things that was a significant drawing card in our store was we 
worked real hard to have what people wanted when they they came in. 
So our turnover was not as brisk as it is in a specialty store. For exam- 
ple, a Wal-Mart store turns its inventory 12 to 14 times a year, while 
we only turned about four times a year. Charles was such a fast- 
moving, hard-driving guy, he was so successful with Radio Shack, that 
he thought those same techniques would work everywhere." 

Leonard's tenure as store president under Tandy lasted only about 
seven months. He resigned in May of 1968, but remained as a director 
of Tandy Corporation for three more years. 

"Charles ran a board meeting just like he ran everything else," 
Leonard said. "He was a take charge sort of guy, who domineered any 
group that he was in. He was very extroverted. But I've never known 
anybody that ever worked any harder than he did. I can remember go- 
ing over to see him at 8 or 9 o'clock at night over at the leathercrafts 
store. Our store stayed open till 9 o'clock three nights a week, and I 
was there on a lot of Fridays and Saturdays. He was a seven-days- 
a-week guy. I never did play with him much, but I understand he played 
pretty hard, too. He drank a lot of whiskey and smoked a lot of cigars." 

Leonard recalled Tandy's barbed-wire side that was so different from 
the gregarious, charming side that people who knew him socially were 
accustomed to seeing. 

"I saw Charles abuse people badly," Leonard said. "He'd sit there 
and let them have it without mercy. The way he talked to his executives 
was just awful. You couldn't imagine the way I saw him abuse Clif 
Overcash." 



Qvercasb haH been running Leonards for three or four years before it 
was sold to Tandy, he claimed, although he was never given the title of 
president. 

"The Leonards wouldn't let anyone have the title of president except 
a Leonards family member," he asserted. 

Overcash met Charles Tandy in 1959 shortly after joining Leonards, 
but did not know him very well at the time of the takeover. Overcash 
had been a vice president and personnel director of Gimbel Brothers in 
New York City at the age of 28, and then had gone with Litt Brothers 
Department Store in Philadelphia and Kresge Department Store in 
Newark, New Jersey, before coming to Leonards. 

After the announcement that Leonards had been sold, Overcash re- 
called, "Tandy called me out to his apartment on Curzon and told me, 
'You're my guy. I don't care who has the title.'" 

Overcash gained the title of president on May 31, 1968, after Paul 
Leonard stepped down. He also continued to hold the responsibilities of 
general merchandise manager. 

"We had a lot of meetings," Overcash recalled. "We had a monthly 
meeting when Paul and I were operating together. The monthly meeting 
was all buyers and managers. We went over the previous month's fig- 
ures and what our targets were for the following months. Once in a 
while Tandy would come in and disrupt the proceedings." 

Tandy, Overcash added, was always "real gung-ho," never expressing 
a negative thought, constantly telling everyone how big Leonards was 
going to be. Early on, he began searching for vehicles to implement 
his concept of going national with a chain of stores from one of the 
Leonards departments. 

"We went that way," Overcash related. "We tried it. We opened auto 
centers. I don't remember how many we had, ten or 12 of them. We 
had fabric stores. We had ten or 12 of those. The auto centers and the 
fabric stores were located in Texas primarily, but one auto center was 
opened in McAlester, Oklahoma." 



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tween him and Tandy that eventually led to his leaving the store in 
frustration. He described what happened: 

"Charles and I fought constantly because I wouldn't agree with his 
trying to make Leonards into a specialty store. I knew it wouldn't work 



A LINGERIE DEPARTMENT LOSES ITS PANTIES 245 

in a department store, especially a department store with the reputation 
of having this broad stuff. One of the first battles we got into was over 
flashlight batteries. We had, when we were operating Leonards, proba- 
bly six, eight, ten or twelve brands of flashlight batteries in stock. 
Charles said, 'Take all the brands out and put Radio Shack batteries in,' 
nothing else. That was just typical of him." 

Overcash recalled other changes that Tandy instituted. 

"In the lingerie department, we used to have four or five different 
manufacturers of bras and the same in panties and slips. Then Tandy 
came in and told us to go down to one brand and put our strength in 
that one. That works all right if you've built your reputation on a spe- 
cialty store approach. But Leonards had built its reputation and accep- 
tance by having a broad line of merchandise. Leonards wasn't known 
for being high quality in its merchandise, especially in the soft lines. 
They were price-oriented. The slogan was 'More merchandise for less 
money.' So, if you're going to hit the price area, you've got to have 
something else to go with it, and we had assortments, broad assort- 
ments, in the soft lines and the hard lines. We had as good a quality in 
the hard lines as anybody in the United States — in cookware, sporting 
goods, hardware, furniture and all that stuff." 

When Tandy bought Leonards, Overcash continued, three things hap- 
pened and all of them were bad. 

"One, he sold the credit. That ruptured our business, because Trans- 
america actually was operating the Leonards credit department and 
Leonards had had a very easy, soft, 'down South' credit policy before. 
Now it became a savings and loan or a loan shark credit operation. 
They ran off millions of dollars worth of business. I never had a more 
miserable two years in my life on the phone with customers irate over 
the way they were being treated on their credit. 

"The second mistake was trying to operate a department store as a 
specialty store, which meant curtailing the brands and items you had. 
Leonards had always had depth and breadth in stock, and Tandy want- 
ed to go into a very narrow merchandising program, the same as a spe- 
cialty store. 

"The third mistake was the blowing explosion of expansion, which 
was Tandy's absolute dictate. Just for Leonards, for instance, forget 
auto centers for a minute, forget fabric stores, although we had to blow 
and go with those and with Mitchell's as well. But we built the North- 
east Mall store, we built the Forum 303 store, we built the Irving Shop- 



?46 A L.TNGERTE DEPARTMENT LOSES ITS PANTIES 

ning Center mall store. That's three major department stores opening in 
a year-and-a-half to two years 5 time. Spending a lot of money, a lot of 

time." 

The Northeast Mall store, a 240,000-square foot structure on two lev- 
els in Hurst, and a smaller store in the Forum 303 Shopping Mall in the 
Arlington-Grand Prairie area, were built at a cost of $4.5 million and 
were financed through a public offering of 300,000 shares of common 
stock on April 18, 1968. The shares were snapped up at a price of 
$57.50 per share, prompting some brokers to call the success of the of- 
fering "a remarkable display of strength in a stock in which existing eq- 
uity was being diluted." The Forum 303 store opened on October 31, 
1969, and the Northeast Mall store on July 10, 1970. 

Overcash insisted he explained to Tandy tuat iuC ruie Ox tiiurnu in 
opening branch stores was that they would lose money the first two 
years and might break even in the third year of operation. The Leonards 
suburban expansion program, Overcash summarized, resulted in an in- 
crease in total sales from $50 million to $100 million, of which $50 
million was unprofitable. 

"So," he continued, "we had our credit problem, we had reduced our 
merchandise and were ruining our image with our customers, and now 
we were losing tons of money because of an ego expansion program. 
That's precisely what was happening. And we were also blowing and 
going with Mitchell's, a junior department store chain that sold ready- 
to-wear and shoes, no furniture or appliances. We had about six Mitch- 
ell's stores when Tandy bought them, and we ended up with about 30. 
They were located all over Texas and one was in McAlester, Oklaho- 
ma. It was forced expansion, that's what it was." Overcash conceded 
that Tandy had been successfully doing essentially the same thing with 
Radio Shack. "He thought if he did it with Radio Shack, he could do it 
with anything. The markup in the department store business was not as 
great as it was in Radio Shack, and Tandy had gotten additional markup 
in Radio Shack because he had a bunch of merchandise made in Japan. 

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°vercash cited another problem with which Tandy had to learn to 
contend. 

"In a department store," Overcash noted, "if you come down to 
the bottom line with a three percent net profit, that's outstanding. But 
Tandy was accustomed to 15 to 20 percent net profit in Radio Shack. 



A LINGERIE DEPARTMENT LOSES ITS PANTIES 247 

So Leonards really didn't fit his pistol. It was an ego trip for him. He 
had once sat across the street from Leonards. He looked at Leonards 
and he dreamed about owning it and its reputation, Everybody in town 
knew Leonards Department Store. But buying Leonards did put him in 
the big leagues, volume-wise. It opened up the credit lines for him, it 
kicked him into more than $100 million in sales immediately." 

Overcash' s run-ins with Tandy began with flashlight batteries and 
soon covered the entire gamut of Leonards' operations. There was a 
plethora of conflicts. 

"I believed very strongly in the department store approach if you're 
gonna run a department store," Overcash related. "You can't run it as a 
specialty store. And Tandy wanted me to run it as a specialty store. He 
gave me direct orders six times on those batteries. Finally, Harlan 
Swain said to me, 'You're gonna get fired if you don't get those batter- 
ies out of here.' My secretary said to me, 'You'll get fired, you'll get 
fired,' because she'd hear us shouting and screaming at each other." 

Overcash finally threw in the towel in 1972. He told the newspapers 
he had resigned because of a difference of opinion over policy. Private- 
ly, he said he quit for personal reasons. "It was a matter of honor with 
me that I'd rather not go into, other than the fact that Charles did not 
live up to some promises he made to me," he averred. 

Overcash reportedly left Leonards a millionaire as a result of invest- 
ing in Tandy stock with the proceeds of a bank loan that was co-signed 
by Charles Tandy. He then went on to became a successful investor in 
nursing homes, apartment houses, office buildings, and shopping cen- 
ters, and served a term as mayor of Fort Worth. 

* * * 

In selling the Leonards receivables to Transamerica Credit Corpora- 
tion a month after buying the store, Tandy received face value for the 
approximately $10 million on the Leonards books. But more than that, 
he succeeded in divesting himself of the credit business he detested. 

Connie Powell, a merchandiser in the Leonards Home Furnishings 
Department, recalled Tandy telling him on a number of occasions how 
much he disliked dealing with accounts receivable. 

"Charles' theory was to put the cash in the bank every night," Powell 
said. "But after the sale of the receivables, the troubles commenced. 
Transamerica began turning people down for credit, cancelling their 
credit cards, because they didn't have the right answers on the ques- 
tionnaires that Transamerica sent out. Transamerica had a checklist that 



248 A LINGERIE DEPARTMENT LOSES ITS PANTIES 

contained questions about how much a person made and how much 
money he owed. Things like that. People became very bitter. And on 
top of that, it cost us lots of money in lost sales." 

Leonards' customers, Powell said, had a special loyalty to the store 
that didn't show up in their credit history. He told the story of going in 
to see Marvin Leonard one day for approval of a credit sale for some 
furniture. 

"What's the problem?" Leonard asked. 

"Well, this customer is behind on his payments all over town, to 
Monnig's, Stripling's, Penney's, Sears, you name it." 

"Is he paying us?" 

"Oh, yessir, he's never missed a payment at Leonards." 

"Then let him have the furniture." 

On big ticket items like furniture, pianos, and appliances, Powell ex- 
plained, without credit there are no sales. He estimated that Leonards 
lost $5 million in sales in the first 18 months after the credit operation 
was sold to Transamerica, with most of the losses coming in the down- 
town store. 

Powell recalled Tandy coming into the store after it was sold and vis- 
iting with employees, "sometimes chewing us out for not selling more 
merchandise. But after he finished chewing you out, he'd smile, pat 
you on the shoulder and say, 'When are you gonna come out to see 
me?'" 

Tandy would call him at the store from time to time, Powell reported, 
and tell him to send a TV set out to a rest home or to some needy 
shut-in. 

"He'd say to have it charged to his personal account. He did that 
quite often, with no fanfare. He had a heart as big as a house." 

Powell laughed as he described an incident involving Tandy and Phil 
North. 

"Mr. North was having a cabana built and his swimming pool fixed 
up for a big party," Powell related, "but he got mad at the contractor 
and threw him off the job before it was finished. We had a Home Im- 
provements Department at the time, and Mr. Tandy called me and told 
me to get a crew out to Mr. North's house. He told me, 'Fix it up and 
don't worry about the money.' So I sent the crew out and they finished 
the job. We sent the bill to Mr. Tandy but he got Mr. North to pay it." 

Tandy gave an insight into his disappointment over the way the 
Leonards acquisition was turning out at a meeting with a group of store 



A LINGERIE DEPARTMENT LOSES ITS PANTIES 249 

managers at Green Oaks Inn in Fort Worth in 1971. During the ques- 
tion-and-answer session after he had completed his formal remarks, 
Tandy was asked by one of the store managers how Leonards was do- 
ing. Tandy replied: 

"I was trying to create a newer generation of Radio Shacks with a 
broader merchandise line when I bought Leonards. But it didn't work. 
Still, Leonards has got $50 million to $55 million worth of volume in 
it. There's got to be a pony in that pile somewhere. We've got to get 
some cats who can run that thing right. We're trying to find a route to 
take to make that thing profitable. That's what we're trying to do." 

He never succeeded. 

In January 1974, Leonards was sold to Dillard's Department Stores 
of Little Rock, Arkansas, for 334,445 shares of Dillard's stock worth 
approximately $4.8 million. Dillard's also paid $300,000 in cash for 
miscellaneous equipment in the six Leonards stores and two 
warehouses. 

# * * 

Despite the initial problems he encountered after the Leonards acqui- 
sition, Tandy was not dissuaded from taking a crack at resurrecting an- 
other old-line retailing institution in Fort Worth when he learned of its 
availability in the spring of 1968. The object he now coveted was Mea- 
cham's, Inc., a venerable women's specialty department store in down- 
town Fort Worth. Founded in 1902, Meacham's had once occupied 
premises at 2nd and Houston Streets, a block south of the Tandy Leath- 
er Company site. It had been purchased by Milton and S.J. Amstater in 
1937 and had moved into an eight-story building at 5th and Houston 
Streets in 1954. 

Despite its reputation as a top-quality fashion store, Meacham's fell 
on hard times. Its sales dropped below $2 million. Jack Greenman, a 
Fort Worth grain dealer and a friend of Milton Amstater' s, knew that 
Amstater was looking for a buyer. Greenman also was aware of Charles 
Tandy's itch to own everything of consequence in his hometown. 

"So I called Charles and told him about Meacham's being for sale," 
Greenman related. 

Tandy's response was, "Meet me for breakfast tomorrow." 

Over breakfast at the Fort Worth Club, Greenman told Tandy about 
the Meacham's situation and caught Tandy's attention with the com- 
ment, "The business may not be too good, but it's got a heckuva loca- 
tion." There was no way he could lose, Tandy figured. If Meacham's 



250 A LINGERIE DEPARTMENT LOSES ITS PANTIES 

didn't pan out, its eight-story building in the heart of Fort Worth's cen- 
tral business district would be worth what he planned to offer Amstater 
for the business. 

On June 2, 1968, the announcement of the purchase of Meacham's, 
Inc., for "near $1 million" was made by Tandy and Milton Amstater. 
The 65,000 square foot Meacham's Building was included in the deal. 
At the press conference announcing the purchase, Tandy said, "The 
downtown area is ready for dynamic development, and the Meacham 
Building will definitely be a part of that development." Tandy also an- 
nounced plans for four additional "prestige type" Meacham's suburban 
stores. 

"I think we can support four such stores in the suburbs," he main- 
tained. "Our ladies are well-dressed. I think they will respond enthusi- 
astically to the opportunity of buying merchandise that fits their own 
personalities from a home-owned company." 

This was a not-so-subtle dig at Dallas-based Neiman-Marcus, 
which had recently opened a specialty store on Fort Worth's far west 
side. 

Matilda Nail Peeler, who was manager of the Galleria Department of 
the Neiman-Marcus store in Fort Worth before joining Meacham's as 
head buyer in couture fashions after Tandy bought it, said Tandy's plan 
for Meacham's was to turn it into another Neiman-Marcus. He con- 
vinced Mrs. Peeler to leave Neiman's and help revive Meacham's. 

"Meacham's was really run down," Mrs. Peeler recounted. "The mer- 
chandise was really off. The fashion world had passed the Amstaters 
by. On top of that, all downtown stores were hurting. Suburbia was kill- 
ing downtown." 

The news that Mrs. Peeler, an attractive divorcee and former beauty 
queen (she had been the Maid of Cotton in 1948), was joining Mea- 
cham's in a top level job caused many tongues to begin wagging in 
Fort Worth social circle! She and Charles had been dating regularly af- 
ter being brought together by Fort Worth socialites Martha and Elton 
Hyder at a black tie dinner benefitting the Fort Worth Ballet. 

Matilda had been divorced from Tully Petty, a Fort Worth advertising 
man, and Charles was a recent widower who had become Fort Worth's 
most eligible bachelor. The talk around town was that he had bought 
Meacham's for her. 



A LINGERIE DEPARTMENT LOSES ITS PANTIES 251 

Asked about this during an interview, she laughed heartily. 

"I know what people were saying at the time, and I wish I could tell 
you it was true. But the fact is, he was dating Mildred Fender and Bren- 
da Slaughter and a lot of other women at the time. We weren't that 
serious." 

She laughed again. 

"Come to think of it, he was dating practically everybody who 
walked into the store." 

She did admit that Tandy had her in mind when he bought Mea- 
cham's, but only because he thought she could run it. "As a matter of 
fact," she added, "when Charles told me he wanted me to run Mea- 
cham's, I told him I was afraid I couldn't handle it alone. I asked him 
to talk to Ann Quinn, who was then the Neiman-Marcus personnel 
manager, and he did. So Ann came to Meacham's at the same time that 
I did." 

Mrs. Quinn, who would later become a senior vice president of mar- 
keting at Team Bank in Fort Worth, joined Meacham's as assistant 
manager. 

"It was a harrowing experience," Mrs. Peeler described her Mea- 
cham's tenure. "Charles wanted to compete with Neiman's but he 
wanted us to run Meacham's the way he ran Radio Shack. He wanted 
to put furs into Leonards. I told him, 'No woman wants a mink coat 
with a Leonards label.' But you couldn't tell Charles anything. When I 
went on a buying trip, he wanted me to buy out New York. 

"I said, 'You can't buy high fashion that way.' 

"He said, 'We sure can.'" 

Mrs. Quinn recalled Tandy asking her before a buying trip, "How 
much merchandise is Matilda going to buy?" 

When she told him, he exploded, "That's not enough to send her to 
New York for." 

"The thing Charles refused to understand," Mrs. Quinn said, "was 
that you can't buy 300 high couture dresses at a time. But that's the 
way he was used to buying for Radio Shack." 

It was Tandy's Radio Shack orientation, Mrs. Peeler observed, that 
caused him to open Meacham's suburban stores in the Ridglea and 
Wedgwood areas of Fort Worth and in the Northeast Mall at Hurst and 
close the downtown store. 



252 A LINGERIE DEPARTMENT LOSES ITS PANTIES 

"That was the Radio Shack syndrome," she averred, "have a store on 
every corner. We really fought going suburban. We had $500 dresses at 
the Northeast Mall, but the people shopping there were looking for blue 
jeans, not designer clothes." 

The Meacham's acquisition, as was the case with Leonards, never 
lived up to Tandy's expectations. Its sales remained stagnant and it was 
never profitable. On June 2, 1972 it was sold to Margo's LaMode, Inc., 
a Dallas specialty retailer. 

Announcing the sale, Dave Beckerman, then a Tandy Corporation 
vice president with responsibility for Meacham's and Mitchell's, can- 
didly admitted: 

"The sale of the Meacham's business, after four years of ownership, 
is based on our conclusion that the women's fashion business does not 
lend itself to our areas of expertise." 

Beckerman later expounded on the statement. 

"The Tandy method of running a business and running stores didn't 
really apply to Leonards or Meacham's or Mitchell's," he said. "We 
didn't know how to run a department store, and we still don't. It's not 

Mitchell's operations were discontinued as of December 31, 1973, 
through the transfer and sale of its inventories to several companies and 
individuals. 

In fiscal 1973, Leonards and Mitchell's had combined sales of $54.8 
million, of which Leonards contributed $35.4 million. Their combined 
losses for the year were approximately $4 million. Their combined 
losses totaled $11.1 million before they were finally sold, which also 
marked the discontinuance of the General Retailing Marketing Group. 

For Charles Tandy, there would be many additional acquisitions in 
the offing, new fodder for his insatiable appetite, but there would be no 
more department stores. 



Chapter 17 
A Brush With the Grim Reaper 



Lost in the outpouring of publicity created by the Leonards acquisi- 
tion was another development which proved to be of considerably 
greater significance as far as growth and profitability were concerned. 
This was the entry of Radio Shack into the dealer store and franchising 
fields, with the awarding of the initial franchise to Carter L. Wilson of 
Tyler, Texas, on August 30, 1967. 

Jim West explained the rationale behind the move in a newspaper 
interview. 

"Radio Shack has grown from nine stores to 160 stores in the past 
four years," West said. "In looking for just the right kind of people to 
operate our stores, we find there are many who would like to come with 
us, but as owners rather than as employees. This is the reason for the 
initiation of the franchise plan." 

According to Lew Kornfeld, who was then Radio Shack's vice presi- 
dent for merchandising and advertising in Boston, Charles Tandy had 
been considering going into franchising for some time. 

"He had the idea quite early on that we could expand more rapidly 
and more cheaply if we went into franchising; that we could, in effect, 
open new stores at half the cost of opening company-owned stores." 

By early October of 1967, the first three of a projected 300 franchise 
stores were operating under the new program. They were located, in ad- 
dition to Tyler, Texas, in Watertown, Maine and Trenton, New Jersey. 

Bruce Russell, who had been named director of franchise operations 
in Boston, was quoted in Audio Times, a trade publication based in 
New York, as stating that responses had been received from prospec- 
tive franchisees in 44 states and six foreign countries to a Radio Shack 
flyer outlining the franchising plan. 



253 



254 A BRUSH WITH THE GRIM REAPER 

Under the program, Radio Shack provided the franchise stores with 
inventory that was shipped within seven days after the signing of the 
franchise agreement. Franchise stores agreed to stock about 2,000 items 
with a total retail value ranging from $20,000 to $30,000, with Radio 
Shack "marketing engineers" assisting the franchisee in selecting the 
inventory. The program also included an arrangement whereby, if the 
store became "unbalanced" on some items, it could return "overstocks" 
in exchange for items needed. Included in the franchise package was 
assistance from Radio Shack in store layouts, fixturing, advertising and 
promotion, and store operation. Franchise stores also received "fall rep- 
resentation" in Radio Shack advertising, including being listed along 
with company-owned stores in the ads. Radio Shack also mailed its 
flyers to franchise store customers "on a regular basis" from Fort 
Worth. 

"We feel we have a real winner in this program," Russell told Audio 
Times in an article that appeared on October 15, 1967. "The profit po- 
tential for the man who has one of our franchises is darned good. Peo- 
ple who go along with us will make out well. We're very serious about 
this effort." He also disclosed that Radio Shack, under "very special 
circumstances, would offer some financial assistance to those wanting a 
franchise." 

Franchises initially were put into larger cities where company-owned 
stores were not being opened. However, with the inauguration of the 
dealer store program in 1972, the solicitation of new franchisees was 
halted. 

Dealing with experienced, successful retailers in the dealer store pro- 
gram posed fewer problems than coping with franchisees, most of 
whom had no prior retailing experience. 

Anthony A. Bernabei, a Princeton graduate who had grown up in 
New Jersey and had joined Radio Shack in 1969 after working in pre- 
Castro Cuba and on Wall Street, had been named head of the Franchise 
Division in 1970. Bernabei claimed credit for selling Charles Tandy on 
the dealer store program. He said the idea initially came up during a 
conversation with Bob Lynch, his assistant in the Franchise Division. 

"We were talking about doing a dealer program and I said, 'I don't 
think we're ready for that yet.' But later we went to see Charles and I 
wrote a one-page memorandum saying, 'Charles, I think we're mature 
enough to start a dealer program in cities of less than 20,000 population 
where the nearest Radio Shack store would be so far away that it 
wouldn't impinge on the marketplace.' I said I thought we could have 



A BRUSH WITH THE GRIM REAPER 255 

2,000 of these stores across the country. We showed the memorandum 
to Charles on a Wednesday, and on Thursday or Friday we went to 
Granbury and signed the first deal The guy we signed up sold refriger- 
ators and ranges and what-not. I don't remember the exact details, but 
he had to pay, like $500, and then he put out his Radio Shack dealer 
sign." 

Granbury is a small town about 30 miles southwest of Fort Worth, 
and was "way out of any geographical or demographical competition 
with Fort Worth," Bernabei noted. Nevertheless, concern was immedi- 
ately expressed by the district and regional managers in Fort Worth 
over what they perceived as an invasion of their territorial rights. As the 
program developed nationally, Bernabei added, "every other regional 
manager saw it as a threat." 

Lew Kornfeld also claimed credit for the origination of the dealer 
store program. "It was my idea," he maintained. "There may be others 
who claim it, but I know I had the idea (I don't know if I had it alone) 
because I had always tried what I called 'wholesaling' my unique im- 
ports from the Orient in order to get the volume up to where the price 
would be lower. I even had people like Allied Radio as customers. So 
I'd had some experience selling product to others. To me, it was obvi- 
ous that we could do [the dealer store program] without making any- 
body angry, especially since we sought dealers in towns where there 
wasn't enough population for us to open a Radio Shack store." 

The object of the program, Kornfeld said, was to have the dealers add 
the Radio Shack line to the lines they were already selling. "These peo- 
ple were already established in business," he pointed out. "They were 
credit-worthy. All they had to be was convinced this was a good thing 
for them, and it was. So we switched from franchising over to dealer 
operations." The dealer stores, operated by independent radio, televi- 
sion, and appliance retailers, offered a new, untapped market for Radio 
Shack merchandise. And since they did not pose the problems confront- 
ed in the franchise operations, they thrived. They were added at an av- 
erage of 175 per year and by 1982 there were 2,000 of them selling 
Radio Shack merchandise in the hinterlands. Their sales were helped by 
Radio Shack's national television advertising. 

"Our TV ads increased our awareness," Kornfeld noted. "We were 
more credible when we knocked on a prospect's door. Our signed-up 
dealers reported seeing our TV commercials and doing more business, 
and our network TV's reach was so total there was no part of the coun- 
try oxir advertising didn't penetrate." 



256 A BRUSH WITH THE GRIM REAPER 



Meantime, back in Fort Worth, Charles Tandy was in the process of 
negotiating another deal 

"If you drink a lot of milk," he once told an associate, "you oughta 
buy a cow." 

The sentiment entered into his decision to buy the Stafford-Lowdon 
Company of Fort Worth in January, 1968: "If you're doing a lot of 
printing, you oughta buy a printing business." 

Bob Lowdon, who had been a favorite fishing and hunting compan- 
ion of Dave Tandy's, had become the president of Stafford-Lowdon, 
the firm that had been doing printing for Tandy Corporation since the 
Hinckley-Tandy Leather Company days. Lowdon was also a Tandy 
shareholder, having bought stock at Dave Tandy's invitation during the 
American Hide & Leather era. He had joined the Tandy board in 1966 
at Charles' invitation. 

In late 1967, Tandy approached Lowdon about buying his company. 

"We were doing a lot of printing for Tandy and they were spending a 
lot of money with us," Lowdon recalled. "We had the equipment for 

fUo Ulrrrrcxr- mKc tViot fh^r ry^^A^A qnH Chnr)(*Q ft onrerl Vip'H make a rvrofit 

two ways by buying us — the profit we were making on the printing we 
did for Tandy and the profit we were making from oixr other business. I 
remember he used the term, 'double dip.' He was going to get a double 
dip by buying us." 

Stafford-Lowdon 's volume was about $7 million and its pre-tax earn- 
ings were approximately $600,000. "We were profitable," Lowdon 
said, "but not nearly as much as we became later on after Tandy bought 
us. He wanted to expand everything that was profitable. He was smart 
as a whip and he really knew how to make money." 

Stafford-Lowdon was purchased for approximately 100,000 shares of 
Tandy stock worth about $5.6 million and Lowdon became one of 
Tandy Corporation's largest individual shareholders. He used his influ- 
ence to convince most of the other Stafford-Lowdon owners to retain 
the Tandy stock they received in the transaction. 

"I was convinced Tandy was going to make more money all the 
time," Lowdon said. "Over the years, the people who didn't hang on to 
their stock were sorry. Some people could hardly wait to sell their 
stock, and I'm sure they wake up screaming at night. Horace Porter 
sold his stock right away after he sold Royal Tile to Tandy. The Le- 
onards sold their stock right away, and Hugh Wolfe could hardly wait 
to get his hands on that stock so he could sell it after he sold Wolfe 



A BRUSH WITH THE GRIM REAPER 257 

Nurseries to Tandy. Charles tried to talk them out of it. He told them 
they were making a bad mistake, but they wouldn't believe him. It cost 
them all a great deal of money." 

Tandy later would grouse to some of his confidants, as Tandy stock 
continued to hit new highs, that he'd paid too much money for 
Stafford-Lowdon because he had bought it for stock instead of cash. 

Lowdon, who retired from the Tandy board in 1990, recalled how 
frustrated Tandy became when one of his own executives failed 
to follow his dictates about buying stock in the company. One of 
the culprits who incurred Tandy's ire was his longtime friend, Bill 
Collins. 

"When I first went out to California after joining the company," Col- 
lins recounted, "Charles said to me, 'Be sure and buy some stock.' But 
after selling my house in Fort Worth and moving my family out to a 
more expensive place to live, I needed to get the most out of every dol- 
lar I could. So, two years later, I still hadn't bought any stock. When 
Tandy found out about it, he called me up and said, 'Now, damn it, get 
on the ball and buy some stock.' I said, 'All right, but things are mighty 
tight. I can't afford it.' His answer was, 'Goddamn it, do it.' So I did it. 
Later, of course, I was very glad I had." 

Dave Beckerman recalled one of the first meetings held for Radio 
Shack store managers after Tandy assumed control. "He told the group 
that he liked his people to be invested in the company," Beckerman re- 
lated. "Then he held up a sheaf of Tandy stock certificates and said, 
T've got this stock here and I can arrange for loans for all of you to buy 
some.' Tandy's initial deal," Beckerman continued, "was that we could 
buy Tandy stock, which was then selling for around $6 a share. If, at 
the end of a year, if we were dissatisfied, he would buy it back from us 
at the price we had paid for it, plus our brokerage fees. I didn't have 
much money then," Beckerman continued. "My old Radio Shack stock 
had gone down the drain. But I went out and bought 500 shares of 
Tandy, which was a lot of money for me. I had a negative net worth 
then, so it wasn't easy for me to raise the money to buy the 500 shares. 
But I did buy it. Today that $3,000 investment would be worth over $2 
million." 

Beckerman recalled an incident that took place after his Tandy stock 
had made him a millionaire on paper in the early 1970s. 

"I went to a liquor store, bought a bottle of Dom Perignon, had it 
chilled, and at 5:30 that afternoon drove out to Tandy's apartment on 
Curzon Street. I put the bottle on the table and opened it and I poured 



258 A BRUSH WITH THE GRIM REAPER 

us both a glass. Then I raised my glass in a toast and I said, 'Charles, I 
brought this bottle along because I want you to know that today I 
counted up my net worth and it's in excess of a million dollars. You 
know, Charles, I think that for as long as I've worked for you, I've 
wanted to have enough money to be able to tell you to your face to go 
fuck yourself. But now that I have enough money, I've somehow lost 
the desire." 

Tandy almost fell off his chair laughing. 

Dave Christopher, who joined Radio Shack as a part-time employee 
during the 1966 Christmas season and would go on to become president 
of A&A Trading Corporation and a senior vice president of Tandy Cor- 
poration, remembered his initial exposure to Tandy's passion for get- 
ting his employees to buy stock. 

"It was at my first store managers' bonus meeting," he recalled. 
"There was no question what Mr. Tandy wanted us to do — buy stock in 
the company. He had lots of support from the audience. Typically at 
those meetings there were a number of old Tandy hands, old Tandy 
Leather employees, who had seen this pressure and were well- versed in 

u rru^r Txr^ilrl rtot i *« ortH cmwa tectimrm v 5i« tn hnw orpat the nrooram 

was and how everyone really needed to participate. They were the first 
ones to raise their hands and say they wanted to buy more stock. It 
made newcomers like me figure, 'Gee whiz, these guys know a lot 
more about it than I do. They must be smart. And I just heard Charles 
Tandy tell us how great it's gonna be, so I'd better buy some stock.' 

"The program he outlined was essentially that we could buy stock by 
putting down 25 percent of the total purchase price and that the Fort 
Worth National bank would carry the balance on a personal note at the 
prevailing interest rate until the next year's bonus time rolled around. 
That got to be kind of a vicious cycle, because you'd end up each year 
owing 75 percent of what you'd committed to in the prior year, and 
you'd keep on doing it year after year. So you always owed 75 percent 
of what you'd bought. 

"Since the stock was going up, everybody could calculate pretty easi- 
ly that they were coming out ahead on this routine of buying more 
stock on credit each year. Everything looked great for a long time. 
There was a lot of growth in the company, a lot of expansion, a lot of 
opportunities. A lot of guys got promoted to bigger jobs, bigger pay- 
checks, bigger bonuses, and the tendency was to buy more shares as 
you made more money. A lot of people even bought additional stock by 



A BRUSH WITH THE GRIM REAPER 259 

borrowing money from their local bank using the stock they already 
owned as collateral. All this was looking real good until 1970 when 
things started to hit the skids. The price of the stock began falling and 
people started getting calls from their banker for more collateral be- 
cause the value of the stock wasn't high enough any more to cover their 
loans. 

"In my particular case, I had a banker who called me a number 
of times for more collateral. The first time he called, I brought him 
the title to my wife's automobile. Before things were over, I had anoth- 
er call and had to go down and sign a chattel mortgage for my furni- 
ture. Things really got a little scary." Fate finally smiled on Christopher 
in 1974. He was transferred from Kansas City, where he had been 
a district manager since 1970, to a similar position in New York City. 

"I was able to sell my house in Kansas City very easily, and when I 
got the equity out of it, I was able to pay off my banker," Christopher 
said. "This got me out of hock to him and put me in a nice position 
compared to a lot of my peers who had no more collateral to put up and 
had no option but to sell their stock. It was not the best of times for a 
lot of people. Those who were able to survive look back and laugh 
now. But you have two camps. There were those who did have to liqui- 
date and had to sell all their stock just to come out of it. 

One of those who had to sell most of his stock to stay solvent as the 
price plunged to $9 a share was John Roach. 

"Charles was very aware of what was happening," Christopher said. 
"There were a number of people who defaulted on loans. They just 
walked away from them, and Charles had no choice but to make the 
loans good. I assume he picked up whatever stock there was for him- 
self. About that time, when things hit the bottom, we were starting to 
get a little heat from the Securities and Exchange Commission. Even in 
the case of the Tandy Investment Plan, for some people the value of the 
plan was less than they had put in even after the company's matching 
contribution. The company finally offered to let anybody out of the 
plan and to regain all of their investment, plus six percent interest. I 
don't think too many people took advantage of that. I think there were 
only a few people who had less value in the plan than what they'd put 
into it." 

% * * 

Tandy shares had closed at an all-time high of 55 as 1967 drew to a 
close. It was one of the biggest winners on the Big Board, having risen 



260 A BRUSH WITH THE GRIM REAPER 

270 percent from its 1966 year-end closing price of 14 7 /s. Of all the 
1,400 issues listed on the New York Stock Exchange, Tandy ranked 
17th in largest percentage gain in the price of its stock. 

Newsweek business columnist Clem Morgello observed, "Tandy 
Corp. is not a turnaround situation itself. But it specializes in finding 
and buying ailing companies in the retail field (example: Radio Shack) 
and putting them into the black— and it enjoys the extra advantage of 
lower taxes because of the tax-loss benefits it picks up at the same 
time." 

In January, 1968, an ebullient Charles Tandy established a new Radio 
Shack beachhead in the heart of Manhattan with all of the swagger of 
Douglas MacArthur wading ashore on his return to Manila. 

Full-page advertisements in The New York Times and other Big Ap- 
ple dailies heralded the grand opening of the Radio Shack store at 348 
Fifth Avenue on January 31, 1968. New York's First Lady, Mary Lind- 
say, wife of Mayor John Lindsay, assisted by a beaming Charles 
Tandy, cut a strip of magnetic recording tape, in lieu of a ribbon, for- 
mally opening the newest Radio Shack outlet. The site, on the west side 
ox Jt^iitn Avenue oeiwecu jhui emu j^ua ouccw m ^i^ cuau^w v>^ m~ 
Empire State Building, had been the home of a Tandy Leather Com- 
pany store. The leather goods operation was moved to another floor in 
the same building. 

As the customers entered the new store they passed displays of low- 
er-end merchandise, such as transistors, then filtered through several 
parts gondolas, and eventually came out into an alcove featuring hi-fi 
equipment. There they found a surprising array of name brand products 
rather than the usual house brands found at other Radio Shack outlets. 
Charles Tandy told media representatives that the move was an effort to 
gauge the profitability of name brand merchandise. On hand for the 
opening were a number of leaders of the high fidelity industry includ- 
ing Avery Fisher, president of Fisher Radio Corporation and Harold 
Schulman of United Audio, who helped demonstrate their equipment 
to the hundreds of New Yorkers who thronged the store. Representing 
Radio Shack were Lew Kornfeld, Dave Beckerman and Sol Baxt, head 
of lease o n erations in the Macy's stores. 

The Radio Shack expansion program in the Big Apple received 
another boost on February 6, 1968, with the signing of an agreement 
with Friendly Frost, Inc., of Westbury, New York, to establish Radio 
Shack consumer electronics departments in 26 Friendly Frost major ap- 



A BRUSH WITH THE GRIM REAPER 261 

pliance stores in the metropolitan New York City area. The move was 
expected to add approximately $5 million in annual sales to Radio 
Shack. 

The Friendly Frost deal followed on the heels of Radio Shack's ac- 
quisition of the retail division of Terminal-Hudson Electronics, Inc., of 
New York City. The division consisted of 14 leased departments selling 
consumer electronics equipment in major East Coast department stores 
including Macy's in New York, Bamberger's in Newark and John 
Wanamaker's in Philadelphia. 

On February 15, 1968, a headline declaring, "Tandy Aim: 1,000 Out- 
lets in 5 Years," appeared over an article in Audio Times, a New York- 
based industry publication. The article advised that Charles Tandy's 
timetable for opening his 1,000th Radio Shack store was February 1, 
1973. Tandy was quoted as stating, "Pm 49 years old. I want to wrap 
this up. We're going to have 1,000 Radio Shack stores, leased depart- 
ments or franchised stores by the end of five years." 

The article also quoted Tandy: "We are very profit-oriented. Show 
me any other major audio retailing outfit making 10 percent. We plan to 
get into some phase of manufacturing, but the fact that we don't have a 
factory doesn't mean a thing. We have the same characteristics as a 
manufacturer in that we design and engineer many of our own electron- 
ic products and have them made for us. Right now our fall merchandise 
is all committed for manufacture in Japan. We work one or two years 
ahead." 

Radio Shack, Tandy added, enjoyed its "unique" status as a producer 
and merchandiser. "We can talk to manufacturers on an equal basis in 
regard to advertising," he said, "because Radio Shack, in effect, adver- 
tises its own products, just like any big-name producer. And when it 
comes to advertising the products of other manufacturers that we carry 
in our stores, we can give a manufacturer a program that most outfits 
can't." 

Publication of the 1,000-store forecast was followed by a special 
Tandy Corporation shareholders meeting in Fort Worth on February 18, 
1968, at which stockholders approved a management request for an in- 
crease in the number of authorized shares of common stock from 
2,000,000 to 5,000,000, and the authorization of 1,000,000 shares of 
new preferred stock. The increased shares, the company said, would be 
available for future acquisitions. 

On June 24, 1968, Barron's, a leading financial publication, featured 



262 A BRUSH WITH THE GRIM REAPER 

Tandy in an article titled, "New Breed of Merchant Prince," which be- 
gan: "You don't have to be a giant conglomerate (or one which covets 
the role) to come up with an expected merger or two these days. Take 
the case of Tandy Corp., an erstwhile Fort Worth specialist in leather 
goods now transformed into a sprawling retail chain." 

The article noted that Tandy's "bootstrap" operation had grown to en- 
compass a chain of amateur-electronic hobby shops, another of junior 
department stores, and Leonards, "the Fort Worth equivalent of Ma- 
cy's." It added that the Meacham's acquisition earlier that month had 
caused "eyebrows to be raised" in some quarters. 

"If nothing else," the writer, Joan Greene, asserted, "The move rein- 
forces the old shoemaker's proud claim to being the No. 1 merchant in 
its hometown." Referring to Tandy's "unique" corporate philosophy, 
Ms. Greene wrote, "Since its first big move into leathercrafting, the 
firm never has lacked for imagination, enterprise and a talent for doing 
the unexpected. Postwar development of its chain of small hobby 
shops, with mail order units, led in turn to its initial important acquisi- 
tion, Radio Shack, which, incidentally, also provided a $4 million tax 
loss. Witn saxes rising iroin o>zu muiiou to uv^ 4>auu ±uuAiuu ca*v* F i^ 
tax income from $1 million to a projected $8 million in just the past 
five years, Tandy must be doing something right." 

The Barron's earnings forecast for fiscal 1968 proved to be right on 
the money. 

For the year ended June 30, 1968, Tandy reported income before fed- 
eral income taxes and extraordinary credit of $8.1 million or $3.99 per 
share, compared to $3.5 million or $2.06 per share for the prior year. 
Net sales totaled $1 1 1.9 million, up 84 percent over the previous year's 
record high of $60.7 million. Net income was enhanced by the utiliza- 
tion of $4.2 million of tax loss carry-over during fiscal 1968. Had this 
not been applied, net income per share would have been $2.74. 

The question posed to Tandy with increasing frequency was, "What 
are you going to buy next?" 

Bill Aguren, business columnist of the Fort Worth Press, thought he 
knew the answer. On July 19, he published a rumor that Tandy's next 
takeover candidate was none other than Montgomery Ward. 

"The rumor, coming on the heels of Tandy's acquisition of Leonards 
and Meacham's here, has brought chuckles in Fort Worth business cir- 
cles for several weeks," Aguren wrote. "However, the new Texas Busi- 
ness & Industry publication, in its July issue, reports there is talk, 
which Tandy does not deny, that he has his eye on 'one of the nation's 



A BRUSH WITH THE GRIM REAPER 263 

biggest and oldest mail-order-retail corporations — one with $1.3 billion 
in assets last Feb. 1.'" 

The magazine did not name Montgomery Ward, Aguren noted, but 
stated that the company in question had a Fort Worth installation al- 
most directly across the street from the Tandy Corporation headquar- 
ters. Everyone in Fort Worth, of course, knew that Montgomery Ward 
had a major retail and mail order complex on West 7th Street. 

Although he never really considered buying Montgomery Ward, 
which even for him would have been quite a mouthful, Tandy got a 
kick out of the rumors that added to his celebrity status as a wheeler- 
dealer. 

On Tuesday, August 6, the Wall Street Journal reported that Tandy 
had been talking with Rexall Drug and Chemical Co. about a merger 
and quoted Bill Michero as stating, "There have been no meaningful 
conversations and nothing is imminent." 

The Journal article then added, "Told of Mr. Michero' s remarks, a 
Rexall spokesman said no talks about a possible merger had taken place 
with Tandy, but that Tandy had approached Rexall expressing an inter- 
est in acquiring Rexall' s drug division. Rumors about a possible merger 
of Tandy and Rexall circulated after Tandy shares reached a 1968 high 
$80,625 on the New York Stock Exchange last Thursday. The issue 
traded as low as $45 earlier this year. Yesterday, it closed at $79, up $1 
from Friday's close." 

Meanwhile, the pace of the acquisition program continued unabated, 
with four firms joining the Tandy fold. They were: 

Bona Allen, Inc., of Buford, Georgia, a saddlery manufacturer and 
producer of finished leather products for general and industrial use, in 
June for $4 million in cash and notes. Bona Allen was a longtime sup- 
plier of leathers to Tandy Leather Company and Tex Tan. 

The Magee Company, Inc., of Pocahantas, Arkansas, a manufacturer 
and wholesaler of picture frames, for cash totaling approximately $1.5 
million, in July. 

Royal Tile Manufacturing Company of Fort Worth, manufacturer and 
marketer of ceramic tile, for approximately 9,000 shares of Tandy Cor- 
poration common stock, in September. 

Color Tile of Denver, Colorado, the largest importer of ceramic and 
mosaic tile in the nation and operator of 14 stores in the West and Mid- 
west retailing home improvement and beautification materials with 
sales of $6 million, for Tandy stock valued in excess of $3 million, in 
November. 



264 A BRUSH WITH THE GRIM REAPER 

Also, in July, 1968, Radio Shack opened a large regional warehouse 
in the Los Angeles suburb of Garden Grove, California, a further indi- 
cation of the growing emphasis on developing sales on the West Coast. 
The new facility was Radio Shack's third regional warehouse, supple- 
menting the existing ones in Boston and Fort Worth. Its opening fol- 
lowed by several months the creation of a new Radio Shack Western 
Region headed by Jim Buxton, the former supervisor of the San Anto- 
nio Division. 

Buxton was hardly thrilled over being transferred from Texas to Cali- 
fornia. He was looking forward to a banner year in San Antonio in 
1968 because the city was celebrating its 250th birthday with Hemis- 
Fair '68, the first world's fair ever held in the Southwestern United 
States. 

The Radio Shack store in the Tandy Wonderland Mart that Buxton 
opened in 1963 was one of the top volume leaders in the country and 
had been the first outlet in the chain outside of Boston to hit $1 million 
in annual sales. 

"I was doing great," Buxton emphasized, "making decent money, and 
I iiked San Antonio. I was content to stay right there/' Best of all, Bux- 
ton added, Tandy left him alone. And that was the way he liked it. 

"When I first came to work," he explained, "Charles promised me, 
'Buxton, you make me money and I'll leave you alone.'" 

Tandy lived up to his word until January of 1968, when Buxton re- 
ceived a telephone call from him telling him his presence was urgently 
needed in Fort Worth. 

"When Charles called me and told me to come up to Fort Worth, I 
was concerned," Buxton recalled. "When he took me to dinner, I was 
worried. He'd always take you out to dinner to tell you about a new job 
he had in mind for you." 

The new job Tandy had in mind for Buxton was resuscitating Cal- 
ifornia, where Radio Shack was losing money hand over fist. Bux- 
ton told Tandy to find himself another candidate, that he was happy in 
San Antonio and wanted to stay there. Surprisingly, Tandy didn't press 
the issue. That should have given him a forewarning on what was to 



\s\JkklKi. 



The next morning, Buxton got up, packed his suitcase and took a cab 
to the Tandy headquarters. 

"I walked into Charles' office and I asked him, 'Have you decided 
who you're going to get to do the job?'" 



A BRUSH WITH THE GRIM REAPER 265 

Tandy looked up from the P&L statements he was perusing and 
peered at Buxton over his spectacles. 

"I'm sending you/' he said firmly. "But this time, by God, I'm not 
asking you, I'm ordering you to do it." 

It was take-it»or«leave-it time and Buxton took it. 

"So I went to California," he said. "I took over the new Western Re- 
gion, one-third of the United States. I didn't want to do it, but Tandy 
made me do it, and it turned out to be the best thing that ever happened 
to me." 

The Western Region had no way to go but up; it had already hit bot- 
tom. When Buxton arrived, there were 33 stores in operation, none of 
which had ever made a penny's worth of profit. The region was awash 
in red ink. Buxton established the regional headquarters in March of 
1968 in a new warehouse that was under construction in Garden Grove. 
The 72,000 square foot facility also housed the executive, supervisory, 
and advertising offices, quality control laboratories, and a 6,000- 
square-foot model store where new merchandise, fixtures and promo- 
tional techniques could be tested. 

"We outgrew the warehouse almost immediately," Buxton recalled. 
"We really went ahead fast. We opened the warehouse in July of 1968, 
and it was obsolete within a year." During that period, more than 50 
new stores were opened on the West Coast and district offices were es- 
tablished in Los Angeles, San Francisco, and Seattle. In choosing new 
store locations, Buxton said, "We looked for concentrations of people 
and income." 

In the booming Pacific Coast economy, these were not difficult crite- 
ria to meet. 

* # # 

Back home in Fort Worth, Charles Tandy now was enjoying the ac- 
ceptance and respect that had eluded him for so long. Suddenly he was 
in demand as a speaker before business and civic groups and as a guest 
in the best homes in the city. His new status was manifested by his be- 
ing asked by Walter R. Humphrey, editor of the Fort Worth Press, to 
author a guest editorial that appeared on the afternoon of August 5, 
1968. 

"One of the most pungent and profound statements ever made about 
our American society was contained in the title of a song written by 
Roger Miller a couple of years ago: 'Squares Make the World go 
'Round,'" Tandy editorialized. 



266 A BRUSH WITH THE GRIM REAPER 

"These six words clearly state a simple fact of life. This fundamental 
fact has been almost shouted down and forgotten in recent years while 
the news media have been filled with the noisy efforts of nations, 
groups and individuals trying to achieve goals by almost any means 
short of working properly for them. I believe it's time to reappraise the 
role of the 'Squares' of the world. 

"A generation ago a man was complimented to be considered 
'square.' He was proud to make a 'square deal,' 'shoot square/ and be 
'square with the world.' Somehow, though, the word was gradually 
twisted in everyday usage until it became an adjective of contempt. It 
became 'square' (or not 'in') to aspire to manly responsibilities, to rise 
to the aid of a fellow human being, to practice simple honesty, to be a 
builder of something. 

"The 'Squares,' nevertheless, have continued to be dependable, rather 
than dependent. They have continued to act, rather than to react. They 
have continued to perform with pride, rather than to avoid. They have 
continued to stand out as individuals, rather than to submerge in the 
crowd. In other words, there have always been men of dignity and ma- 
turity who have seen to it that the needed and progressive work of the 
world was accomplished. 

"The man who is 'Square,' as always, is the guiding strength of his 
family, his community and his nation. He also brings this strength to 
his work or profession. He is the builder, and he is the one who earns 
any lasting progress that is made. I have had the experience of working 
with thousands of men during my lifetime, and I agree with Roger Mill- 
er that 'Squares' do make the world go 'round." 

Aligning himself with the "Squares" did nothing to diminish Tandy's 
standing in the archly-conservative Fort Worth business community. 
Buttressing the free enterprise system against the inroads of creeping 
socialism was a favorite Tandy topic in his platform appearances, and 
he now demonstrated his support in a more tangible way. 

Since the death of Dave Tandy in 1966, Charles had been seeking a 
suitable vehicle to honor his father's memory. He found it in the en- 
dowment of the David L. Tandy Professorship of American Enterprise 

University. Announcement of the establishment of the professorship 
was made on September 18, 1968, by Charles Tandy and Dr. James M. 



A BRUSH WITH THE GRIM REAPER 267 

Moudy, TCU chancellor, following a meeting of the Tandy Corporation 
Board of Directors in Fort Worth. 

During a brief ceremony at the board meeting, Dr. Moudy comment- 
ed, "We who knew Dave Tandy well appreciate this living memorial to 
a man whose business judgment provided the base from which Tandy 
Corporation has grown and prospered." 

Dr. Ike Harrison, dean of the business school, said the professorship 
would enable the school to recruit another outstanding professor of 
management. One of the activities of the new professor would be the 
encouragement of young men and women to aspire to positions of busi- 
ness leadership, and he also outlined a plan under which promising can- 
didates for master's degrees would serve as interns with top business 
executives of regional firms, under the supervision of the new Tandy 
professor. 

Charles Tandy was on his way to gaining the same kind of status in 
his hometown accorded other legendary figures like Anion Carter Sr., 
Sid W. Richardson, and John B. Connally. One reason was the perfor- 
mance of the stock that bore his name on the New York Stock Ex- 
change, where Tandy was finally getting the recognition its bullish 
board chairman thought it was due. 

During the summer and early fall of 1968, the stock had enjoyed its 
own private bull market. In September, it reached an all-time high of 
80 5 /s, which provided an auspicious backdrop for an appearance by 
Charles before the New York Society of Security Analysts on Septem- 
ber 13. Tandy was in especially fine fettle as he addressed the presti- 
gious body in a private dining room overlooking Lower Manhattan. 

Calling fiscal 1968 "the most profitable and productive year in the 
history of Tandy Corporation," Tandy informed the analysts that the 
company's net worth had more than tripled during the year, from $11.9 
million to $43.4 million, as a result of the retention of earnings of $6.1 
million, the sale of 300,000 shares of stock with proceeds of $16.5 mil- 
lion, the issuance of common stock in connection with acquisitions val- 
ued at $6.5 million, and the issuance of 189,145 shares of common 
stock due to the exercise of warrants totaling $1.2 million. This reduced 
to 30,532 the number of common shares subject to the exercise of war- 
rants at a price of $9 per share, with the remaining warrants due to ex- 
pire on December 31, 1969. 



268 A BRUSH WITH THE GRIM REAPER 

Tandy also waxed bullish on the company's growth, noting that the 
number of retail outlets had reached 465 as of June 30, 1968, compared 
with 327 on the same date the year before, with the largest increases 
coming in the Radio Shack Division. 

"Radio Shack now operates 260 retail outlets in 44 states, an increase 
of 104 over the previous year, and is participating in a vigorously grow- 
ing segment of our economy, in which per capita sales are rising and 
will continue to increase," Tandy said. "The division's sales have 
grown from $12 million to $40 million in the past four years." Most of 
the merchandise sold by Radio Shack, he pointed out, was being mar- 
keted under private brands and manufactured to company specifications 
in the United States and Japan. 

"Our company entered fiscal 1969 with a much broadened base of 
merchandising capability and opportunity, an adequate and strength- 
ened financial condition and structure, and a seasoned operating organi- 
zation," he declared. "These are our key assets. The policies and 
objectives which had produced a successful record of growth since 
1960, when the present management assumed operating control, should 
become increasingly effective when applied tu the greater size and 
scope of the company's total marketing effort. 

"Our policy of retaining earnings for reinvestment to support contin- 
ued expansion of operations will continue. Programs to improve sales 
and profitability will continue to be pursued. Acquisitions suited to en- 
hance existing operations, or to develop new marketing dimensions, 
will continue to be sought out. The coming fiscal year offers opportuni- 
ty to add substantially to the company's continuing record of growth 
and performance, and management looks forward enthusiastically to the 
challenge." 

Little more than a month later, Tandy Corporation would face the 
prospect of losing its leader. 

Charles celebrated his 50th birthday on May 15, 1968, with the help 
of his brother, Bill. The competitive fires that once had flared between 
the brothers had died down. Bill had joined the Tandy board in 1965 
and Had become one 01 L,nanes vaiucu coiiiiumn&. xxc wa& tunomvivu 
an asset on the board by the other directors because of his lack of reti- 
cence in speaking up when he disagreed with the always opinionated 
chairman. Charles, in turn, had proved helpful, through his many con- 
tacts, in steering business to Bill's construction firm in Tulsa. 



A BRUSH WITH THE GRIM REAPER 269 

On the morning after Charles' birthday, the two brothers, each hold- 
ing a big cigar and smiling broadly, were pictured in the Star-Telegram 
standing in front of a billboard that proclaimed in large type: "Charles 
is 50!" 

The caption underneath the photograph said that Bill Tandy had de- 
nied all knowledge of the billboard that had appeared in front of Tandy 
headquarters on West 7th Street or of a number of 2-inch ads that had 
been scattered through that morning's Star-Telegram carrying the same 
"Charles is 50" message enclosed within a heavy black border. 

One thing was readily apparent to anyone looking at the picture. Both 
brothers had eaten too much birthday cake. Charles, especially, looked 
like he had put on a lot of weight. In fact, just like the Tandy stuck, 
Charles was hitting new highs daily on his bathroom scales. It was 
hardly a new problem. All of his adult life, Tandy had been fighting a 
personal "Battle of the Bulge" with his waistline, and his eating and 
drinking habits made weight control all the more difficult. From time to 
time, he embarked on reducing regimens, which included betting Bill 
Tandy on who could lose the most weight within a certain time 
period. Occasionally, Charles also put in a stint at a "fat farm" in 
California. 

The health spa Charles frequented in California was not cheap, Billy 
Roland reported. "It cost him about $1,000 a pound," said Roland who 
wrote all of Tandy's personal checks. 

With his weight having ballooned to 235 pounds, Tandy spoke fre- 
quently about his need to undergo another session at the health spa, but 
he was always too busy to do anything about it. It would take a heart 
attack in Boston on October 8, 1968, to slow him down. 

Dave Beckerman recalled the event that traumatized the company. 

"Charles was in Boston on one of his regular visits when he had the 
heart attack. Then, while he was in the hospital, he had a second heart 
attack. I'd gone to the hospital to visit him. I'd visit him or somebody 
would visit him every day to get marching orders for the day." 

Beckerman arrived at the hospital about 7:30 or 8 o'clock in the 
morning. He found Tandy's room unoccupied and the bed made. A 
nurse's aide was in the room and Beckerman asked her, "Where's Mr. 
Tandy?" Charles had had another heart attack that had almost proved 
fatal. 

"They really thought they'd lost him," Beckerman said. "It took 
about six or seven minutes before they were able to resuscitate him." 



270 A BRUSH WITH THE GRIM REAPER 

The news of Tandy's heart attack caused a near panic in the corporate 
headquarters in Fort Worth. The first concern, of course, was for 
Charles' well being, but running a close second was the fear of what 
the impact would be on the price of the stock. The decision then was 
made to sit on the news pending any further developments. 

But there was one problem. Tandy was scheduled to be the featured 
speaker at a black tie dinner at the Fort Worth Club on October 29, 
when Tandy Corporation was to be honored by the Newcomen Society 
in North America, an organization devoted to business history. Tandy's 
absence would have to be explained and someone else would have to 
deliver the Newcomen Address, a history of the company. The decision 
was made for Jim West to read the speech, which was "ghostwritten" 
by Bill Michero. 

That night, as the 300 guests entered the ballroom of the Fort Worth 
Club, they were handed a brief statement informing them that Charles 
Tandy would not be able to be present that evening, as scheduled, and 
that his place on the program would be taken by Jim West. 

"While in Boston on a business trip," the statement declared, "Mr. 
Tanuy went to a dime aOa a reguiar Ciicc*cup. nis uCCtors expresses 
concern at his overweight condition and insisted that he stay at the clin- 
ic for several days until he reduces his weight to 195 pounds. He is now 
at 210 pounds." 

Reporting on the memo the next morning, the Star-Telegram stated 
that it had learned, "This means that in a matter of three weeks, Tandy 
has 'peeled off some 25 pounds." 

Tandy was quoted in the story as having told friends in Fort Worth, 
"These doctors are pretty tough. But I've decided to go along with 
them. Already I feel a great deal better, and I'll be back there pitching 
as soon as they release me." 

At the dinner, a message from Tandy was read by Sam B. Cantey III, 
the secretary of the Fort Worth Chapter of the Newcomen Society. 

"I firmly believe that to make money for a company and its stock- 
holders, a man must first make money for himself," the message read. 
"All of our key management men from division heads to store manag- 
ers are on a salary plus bonus incentive, with bonuses tied directly to 
profits. This past June, the company paid out more than $2 million in 
year-end bonuses to more than 500 men and women in the organiza- 
tion. That's one out of every ten employees. 

"When we look at potential acquisitions, we also look for the fresh 
talent in those organizations. We intend to realize a high percent return 



A BRUSH WITH THE GRIM REAPER 271 

on investment for each acquisition and know full well that motivating 
the people is as important as analyzing the balance sheet." 

Tandy then added: 

"I believe we have laid the foundation for a $1 billion organization. 
At our present rate of growth, we can hope to achieve that goal. We 
have the dream, the organization and the resources to accept the chal- 
lenge. The opportunities are everywhere. We believe we're only 
beginning." 

Jim West, after tracing the corporate history from the Hinckley- 
Tandy days, noted that Tandy Corporation's growth had been main- 
tained at about a 25 percent compound rate in sales and earnings for the 
past seven years. He then delineated the company's fundamental 
policies: 

"Financial policy? Instead of dividends, we believe our shareholders 
would prefer to see plow-back of earnings leading to capital gains. 

"Bank borrowing? We borrow as much as we need to finance season- 
al requirements. 

"Acquisition policy? We consider no acquisition unless we can see 
the possibility of at least 25 percent profit on assets before tax. 

"Inventory policy? We stock only those items that prove to have fast 
profit-making ability. 

"Compensation policy? We pay our managers generously. None have 
an employment contract, but all are motivated by a profit-oriented bo- 
nus formula." 

Naturally, there was talk around town in the aftermath of the meeting 
that Tandy was in the hospital for more than a weight-reduction pro- 
gram. There were rumors that he had suffered a heart attack, but all 
were promptly denied. The local newspapers made no effort to delve 
into the matter further in spite of the fact that two months would elapse 
before Tandy would return from Boston. And there was no apparent 
concern on Wall Street, where the stock continued to make new highs, 
closing at $93 a share on the day of the Newcomen dinner. 

On November 20, Harold Monroe wrote in his daily financial column 
in the Star-Telegram, "Tandy Corp. reached an all-time high of 96 and 
closed there for a rise of 3 points on the day. An associate of Charles 
Tandy, board chairman, was in touch with him Tuesday at the home of 
his brother, A.R. (Bill) Tandy in Tulsa, where he was reported in good 
health and 'rarin' to go.' He has cut his weight by 36 pounds to 199 
pounds since he went to a Boston hospital last month for a checkup and 
was told by his doctors he'd have to 'peel off a lot."' 



272 A BRUSH WITH THE GRIM REAPER 

After leaving the hospital in mid-November, Tandy spent a week re- 
cuperating in the Florida sunshine. Dave Beckerman flew to Miami 
with him and then drove him to Key Largo, where Tandy checked into 
a resort hotel. 

"A funny thing happened that first night in Key Largo," Beckerman 
recalled. "I wanted to go to bed, but Charles said, 'No, let's have 
a drink first.' So we went to the bar. "It was a horseshoe-shaped 
bar, with the bartender in the middle. So we're sitting at the bar and 
there was a feller on the other side of the horseshoe hiccupping like 
crazy. 

"Charles says to the guy, across the horseshoe, T can get rid of those 
hiccups for you for 20 bucks.' 

"The guy says, T bet you can't.' 

"Charles laid a $20 bill down on the bar and the guy with the hiccups 
laid $20 down on the bar. 

"Charles said to the bartender, 'Give him a tall glass of water.' 

"Now Charles walked behind the guy and told him, Tm going to 
press your ears; and while I press, you drink the water.' 

What Charles did was close off the eustachian tubes, I guess, by putting 
enough pressure on them. 

"Anyway, Charles then picked up the two $20 bills and gave them to 
the bartender. 

"That was Charles just out of the hospital." 

Tandy returned home to Fort Worth on Saturday, December 7, after 
an absence of two months. That night he was the guest of honor at a 
dinner party at the Fort Worth Club given by Continental National 
Bank Board Chairman Robert P. Dupree, a close friend. Dupree had in- 
vited some 25 couples to the dinner, telling them only that he was go- 
ing to have a "mystery guest." 

In an account of the dinner party, Harold Monroe wrote, "Dupree was 
hoping that Tandy had changed so much that nobody would recognize 
him. But it didn't work out that way. Charles Tandy at 194 pounds is 
still Charles Tandy — trimmer and sleeker, but still the same exuberant 
personality who has continued to amaze the financial world with the in- 
creases in the sales of his business (and the price of Tandy stock) every 
year. 

"Even when he was in that Boston hospital, he couldn't quite keep 
his mind off business," Monroe reported. "There was a day when top 



A BRUSH WITH THE GRIM REAPER 273 

executives of a major Boston retail concern were sitting around his bed, 
complete with their accountants and reams of paper and charts and tab- 
ulations. T almost made a deal/ Tandy said, 'but another company that 
was able to use its own office and its full staff of accountants sort of 
sneaked in ahead of me. I still think my offer was better than theirs, but 
I'm not worried. There are still a lot of fine companies all over the 
United States that would make very good Tandy divisions, and there's 
still time to bring them into the fold.'" 

Tandy told Monroe he was "rarin' to go," but that his doctors had in- 
sisted he limit himself to "a couple of hours a day at the office" until 
around the middle of January. 

"That's not for me," he growled. "When I do go back to work, I'm 
going to work full time." 

But although he was not quite cleared to go back to the old grind full 
time, he was keeping in touch with things, Tandy insisted. He spoke 
about a shopping center being planned on the western outskirts of Fort 
Worth. 

"We're thinking in terms of making it a complete shopping center, 
like the original Tandy Mart, but consisting solely of Tandy-owned en- 
terprises. It will sell everything from trees and shrubs to sophisticated 
electronic equipment. We haven't put the numbers together yet, but we 
know where we're going." 

The complex, which would be named Tandy Town, would soon be- 
come a reality on U. S. Highway 80 West, featuring a Radio Shack and 
a Wolfe Nursery among other corporate entities. 

Tandy also had a word of warning for the employees of the far-flung 
Tandy divisions. 

"I've been telling them that while I was away, they took 41 pounds of 
my sweetness away. And so they might find that all that's left is 
meanness." 

Monroe wasn't buying any of that. 

"None of the Tandy employees believe him," he wrote. "They think 
he had a lot more than 41 pounds of sweetness in him." 

The fact is, Tandy would come back from his brush with the grim 
reaper more propulsive then ever. 

Mary Frank recalled, "After his heart attack, I think that's when he 
really began to hurry up and finish up, to pull things together. He was 
afraid time was going to run out on him. That's when he appeared driv- 
en, rushing between Fort Worth and Boston all the time." 



274 A BRUSH WITH THE GRIM REAPER 

Bill Michero saw to it that Tandy was greeted with all of the ceremo- 
ny due the commander-in-chief upon his return to active duty. "In the 
early years of the company," Michero explained, "Charles was able to 
get away with running things with a military style of leadership: Tve 
got three gold braids on my shoulder and you've just got one on your 
sleeve."' So, in honor of Charles' return, Michero designed a flag with 
a Tandy logo. 

"This was a holdover from our Navy time when you ran up the flag 
to designate that the senior officer was present," Michero added. 
"When he was gone, you hauled the flag down. Well, we hung up the 
flag outside of Charles' office on the day he came back to work." 

A short while later, Tandy appeared in Michero 's office with the flag 
under his arm. 

"Michero," he snapped, "I don't want anybody to know where I am, 
and you know that. And you can take this flag and stuff it." 

Then he grinned. 



Chapter 18 

"What Are You Gonna Buy Next, 
General Motors?" 



A leaner, meaner Tandy came back to work foil time shortly after the 
arrival of the new year. He swaggered into the office sporting a tan and 
anew dark grey suit. 

"This is the only suit I have that fits me right," he said proudly, as he 
showed off his new svelte figure. 

He was welcomed back with the news that his hometown was honor- 
ing him with two awards — Top Male Newsmaker of the Year by the 
Press Club of Fort Worth and Outstanding Salesman of the Year by the 
Sales and Marketing Executives of Fort Worth. 

Tandy received the Press Club award in absentia at the annual News- 
makers Ball at Ridglea Country Club on February 8, 1969. He was on 
hand, beaming broadly, however, on February 11 when he accepted the 
Salesman of the Year Award in the Crystal Ballroom atop the venerable 
Hotel Texas in downtown Fort Worth. 

In making the presentation, Lewis H. Bond, then the president of the 
Fort Worth National Bank and the previous year's recipient of the 
award, called Tandy a man "cut from the great American dream." He 
described Tandy as "a man who sells merchandise that won't come 
back to customers that will." 

Walter R. Humphrey, editor of the Fort Worth Press, devoted his 
front page column, The Home Towner, to a paean to Tandy. He wrote: 

"Charles Tandy has been both a buyer and a seller these past couple 
of years. The companies he has bought have helped make Tandy Corp. 
one of the giants in the commercial field. And when you hear that 
Tandy Corp. will have around $180 million in sales this year, you can't 
have a lingering doubt about this super-salesman. 

"Charles Tandy has sold Fort Worth in a big way while he has been 
expanding this unusual empire of his. He has made Fort Worth the 

275 



276 "WHAT ARE YOU GONNA BUY NEXT, GENERAL MOTORS?" 

headquarters of his far-flung operations and the Tandy Corporation 
name on the Big Board in Wall Street has no other reference point but 
Fort Worth. He and his associates have put this city on the map in a 
new way, with the acquisition of Leonards, Meacham's, Stafford- 
Lowdon and other enterprises here at home bolstering their nationwide 
operations. It is difficult to see how anyone else could have been select- 
ed as Fort Worth's top salesman for last year." 

Noting that Tandy had been honored by the Sales and Marketing Ex- 
ecutives, an organization his father had helped found, Humphrey added, 
"This surely must have been a compliment above so many others he 
has received in his rise to fame. He has built quite an empire on the 
firm foundation laid by Dave Tandy in the leather business. With imag- 
ination, vision and daring, he has spread out from this good base into 
many new fields, selling thousands of products." 

The column concluded, "He moves ahead with purpose, but keeps the 
common touch, the down to earth qualities which make him popular, 
not resented, exciting in what he's doing but neither arrogant nor vain 
about it. Yes, the Salesman of the Year is quite a guy, easy to know and 
impossible to dislike." 

Things had never looked so good. Sales and earnings were booming 
and Tandy stock was running rampant. 

Propelled by the announcement of 79 percent increases in sales and 
earnings for the first six months of the 1969 fiscal year and amid ru- 
mors of an impending stock split, the stock hit a new all-time high of 
$103.25 per share in mid-February. 

The two-for-one split, the first in the company's history, was ap- 
proved by the board at its regular meeting on February 20. At the same 
time, holders of the remaining warrants due to expire on December 31, 
1969, were advised that, as a result of the split, the purchase price of 
the stock issuable upon exercise of the warrants would be $4.50 per 
share rather than $9.00 per share. 

On April 8, the effective date of the split, Tandy stock closed at an 
all-time high of IIOV2. 

Tandy now was having the time of his life going around town saying, 
"T +^\A xrmi ar\ " in, r^o>r\1^ who Vmrl f^ileri to follow his advice to buv 

Tandy stock. 

His former partner in the ladies' belt business, John Justin, recalled 
ruefully that, despite Charles' urgings, he'd never bought any Tandy 
stock. 



"WHAT ARE YOU GONNA BUY NEXT', GENERAL MOTORS?" 277 

"I guess I never really believed what he was telling me," Justin said. 
"I could have made a lot of money if I'd listened to him." 

The late William M. Fuller, a prominent Fort Worth oilman, recalled 
eating lunch with Tandy at the Fort Worth Club. After lunch, Tandy in- 
vited him to his office. 

"I want to show you something," he told Fuller. 

At the office, Tandy pulled a sheaf of papers out of his desk. They 
contained sales and earnings projections for Tandy Corporation. 

"All of the lines headed straight up," Fuller said, laughing as he re- 
called the scene. "I couldn't believe what I was seeing. I thought to my- 
self, These can't be right. Nothing goes straight up like that, except a 
rocket ship.'" 

Fuller eventually became a Tandy shareholder and shared in subse- 
quent stock splits, but he acknowledged he missed the boat by not 
clambering aboard earlier. 

Elton Hyder recounted with a chuckle, "Charles loved to call me 
when the stock was going up and brag about how many millionaires 
he'd made that day. But when the stock would go down, I'd call him 
and ask him, 'Charles, how many millionaires have you unmade 
today?' He'd get madder'n hell." 

James S. Garvey, Fort Worth grain operator and rancher, carried a 
vivid recollection of Tandy holding court in front of the Fort Worth 
Club on a wintry afternoon before a group of shivering business and 
professional men. 

"Charles was saying, 'I told you guys to buy my stock, but you 
wouldn't believe me.'" Garvey said. 

Bernie Appel recalled how Tandy enjoyed needling employees who 
had ever exhibited a lack of faith in his vision. During the period when 
Radio Shack was still losing money, Appel had confronted Tandy with 
his concerns over the company's lack of profitability. 

"I went into his office," Appel recalled, "and I said, 'Charles, this is 
crazy. How are you ever going to pay us the bonuses you're promising 
us when we're never going to make a profit? We can't make a profit 
because you're opening all these stores all over the country. That's 
what's draining the profits. How are you gonna do it?'" 

It was about 9:30 in the morning when Appel entered Tandy's office. 

"He was drinking black coffee, as he always did," Appel remem- 
bered. "He kept me in that office all day long. He didn't let me go to 
lunch. He had me going absolutely crazy. I sat there listening in on tele- 



278 "WHAT ARE YOU GONNA BUY NEXT, GENERAL MOTORS?" 

phone calls from the bank, everything that was going on. Whoever 
came into his office, I sat there and listened to the conversation." 

At about 7:30 that night, one of the Radio Shack executives stuck his 
head into the room and saw that Appel still sitting there. 

"Bernie," he asked, "what are you doing here? You were here when I 
came in this morning." 

Appel answered, "I'm still trying to get an answer out of Mr. Tandy 
on how I'm ever going to make any more money at the rate we're 
going." 

"Has he let you have dinner?" 

"What dinner? I haven't had lunch yet." 

Tandy looked up from some papers he'd been perusing. 

"Okay," he said to Appel, "let's go have dinner." 

After dinner, while Tandy savored a brandy and a cigar, Appel made 
one final try. 

"Charles," he said, "you haven't answered the question I asked you 
this morning. How am I ever going to make more money?" 

Tandy puffed on his stogie, exhaled a cloud of pungent smoke, and 
said, "Don't worry about it. Stick with me and I'll make you hcil. 

"That was Charles Tandy," Appel added. "You couldn't argue with 
him. A year later we got our bonuses. He gave us our bonuses and took 
them back and put them into Tandy stock. He believed heart and soul in 
the company and he got us to invest in it." 

Tandy enjoyed his role as Fort Worth's most eligible bachelor. 

"After Gwen's death, every single woman in town tried to date him, 
and some were more vigorous in their pursuits than others," Phil North 
reported. "But he was very adroit in dodging them. He went with a 
number of real attractive ladies and he had several dates with Arlene 
Dahl. I remember one time we were in New York and Arlene was sup- 
posed to meet us someplace and she didn't show up. Charles just got 
furious about it, although I'm not really sure he knew who she was." 

The movie actress figured in another Tandy story told by Elton 
Hyder. 

"We had gotten Charles a date with Arlene Dahl to go to a party at 

n^^rro A*->*> PaHar'c HV/Trc Amon H Carter Jr \ hcMise, About 75 to 

100 people were there. A very pretty party, small tables. Charlie fell 
sound asleep at the table. Arlene was about the maddest red-headed 
woman I ever saw." 



"WHAT ARE YOU GONNA BUY NEXT, GENERAL MOTORS?" 279 

Eunice West recalled being concerned over the intensity with which 
Tandy was playing the dating game. 

"All the young girls in town were chasing Charles, and he was living 
quite a life for a man who had just had a bad heart attack. I told him, 
'Charles, you've got to calm down, you're just going too fast. You have 
to stop all this running around. Make up your mind and marry one of 
them."' 

Tandy answered, "Don't worry about me, Eunice. If I ever marry 
again, I'll marry an older woman." 

He may already have made up his mind. 

On June 12, 1969, he married Anne Burnett Windfohr, the owner of a 
vast oil and ranching empire in northwest Texas and the doyenne of 
Fort Worth society. Tandy had just turned 5 1 and Mrs . Windfohr, the 
widow of Fort Worth independent oil operator Robert F. Windfohr, was 
63 when they were joined in matrimony by the Rev. Louis F. Martin at 
St. Andrews Episcopal Church in Fort Worth. 

The granddaughter of legendary cattleman Samuel Burk Burnett, 
Anne virtually grew up in the saddle. She was as much at home on the 
range as in the drawing room of her palatial home. 

As a youth, Burk Burnett rode the fabled Chisholm Trail through Fort 
Worth, driving herds of Longhorns north to the Kansas railheads. The 
family holdings his granddaughter inherited included the vast 6666 
Ranch in King County, Texas, and the two Triangle Ranches in Wichita 
County and Panhandle, Texas. Burk Burnett won the 6666 Ranch in a 
high-stakes poker game and named it after his winning hand. 

The wedding of Anne Burnett Windfohr and Charles Tandy was big 
news in Fort Worth, not only because of the prominence of the princi- 
pals and the disparity in their ages, but because of the fact that it came 
as such a surprise. No one knew they had even been dating. 

"They were very, very quiet about it," Phil North said. "In fact, they 
never had a date in Fort Worth." 

North was sworn to secrecy by Tandy when he informed him about 
the impending nuptials. North's wife, Janice, didn't learn about it until 
several weeks later. 

"It's time we told Janice," Tandy said to North. "Why don't you tell 
her that Anne wants her to come over for a drink this afternoon." 

"So we went over to Anne's old house, the new one wasn't finished 
yet," North said. "We walked in and there was Anne wearing the new 



280 "WHAT ARE YOU GONNA BUY NEXT, GENERAL MOTORS?" 

diamond ring that Charles had gotten at Harry Winston. Then we went 
over and looked at the new house." 

Eunice West received the news of the impending nuptials in a tele- 
phone call from Charles on a Saturday evening. 

"I want to tell you something," he said. "I'm over at Anne's and 
we're going to get married. She wants to talk to you." 

Anne came on the phone, Mrs. West recalled. 

"She told me that they were going to marry, and then she said, 'It 
will more than likely be a convenience marriage because there is a lot 
of difference in our ages. But we can travel and go places together."' 

Elton Hyder recalled he was in Tandy's apartment on Curzon when 
he learned the news. 

"Charles said, Tve got something to tell you,'" Hyder recounted. "I 
looked over in the corner at Anne and I said, 'You're gonna get mar- 
ried.' And she said, 'that's right.'" 

The wedding preparations were carried out under security precautions 
almost as tight as the D-day invasion of Normandy. 

"They didn't want any news to leak out in advance," Phil North dis- 
closed, Si so we nati soincDoay irom ine county ciem 6 o.uu;c come u> 
my living room the night before the wedding and they sent the marriage 
license out to my house." 

The ceremony was held in a small side chapel at the church. Bill 
Tandy was the best man. Eunice and Jim West, Connie and Jesse Up- 
church, Janice and Phil North, and Mary Louise Tandy, Bill's wife, at- 
tended. Also present were some of the cowboys from Anne Burnett's 
ranch. The group, including the bride and groom, went to Ridglea 
Country Club for dinner. 

When the news of the nuptials broke, it became the number one topic 
of conversation in Fort Worth. One of the better lines that made the 
rounds was that it was the first marriage that ever had to be approved 
by the Securities and Exchange Commission. 

Lewis Bond, Tandy's banker, told an associate that he had seen 
the Windfohr-Tandy pre-marital agreement and that it contained more 
pages than the prospectus the bank had filed with federal agencies prior 

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Other friends like wealthy oilman W.A. (Tex) Moncrief, Jr., had a lot 
of fun needling Tandy about his marital obligations, particularly in light 
of his heart condition. 



"WHAT ARE YOU GONNA BUY NEXT, GENERAL MOTORS?" 281 

"I was with Charles at Anne's house right before the wedding," Mon- 
crief recalled with a laugh, "and I told him to be sure and take his doc- 
tor along with him on the honeymoon." 

The newlyweds spent their honeymoon at Dave Tandy's old house in 
Rockport. The site was definitely not the Pierre in New York, the Cril- 
lon in Paris, or the Hassler in Rome, which were more to Anne's style, 
but Charles was quite vehement that a lengthy absence from the office 
at that time was simply out of the question. 

Phil North, who owned a vacation home in Rockport not far from the 
Dave Tandy place, was at home in Fort Worth when he received a 
phone call from Tandy on the third day after the wedding. 

"Will you come down here and talk business to me?" Tandy pleaded. 

North said he replied, "Charles, you're on your honeymo^ 
gonna do it." 

But Tandy was not about to be put off 

"So the next day I went down to Rockport and spent part of their 
honeymoon with them," North said. 

Elton Hyder reminisced about accompanying Anne and Charles to 
Rockport on one occasion and watching her do her morning calis- 
thenics. 

"She was a good-looking woman who worked hard at keeping in 
shape. She had a great figure," Hyder said. "She also had a lot of style. 
I can remember her driving around town in a Duesenberg and a Rolls- 
Royce. And the LM. Pei-designed house she had built was really 
spectacular." 

The "mansion," as the house was known around Tandy corporate 
headquarters to differentiate it from the "apartment" on Curzon, fea- 
tured a magnificent salon with ceiling that soared to a height of 150 
feet. "There was a tremendous tree growing in the room that was about 
60 feet tall," Hyder said. 

"The house was really spectacular," he continued. "I have the dining 
room chairs that Anne did the crocheting for. She did beautiful crochet- 
ing. There are 24 chairs and they are beautiful I bought them at Sothe- 
by's when her estate put them on sale. She had a little pool of water in 
the house that you couldn't see, and some people walked into it. And 
she had these gorgeous paintings. Anne had beautiful taste, truly beauti- 
ful taste. A lot of the paintings were Picassos and a lot were Impres- 
sionists and there were some Georgia O'Keeffes. And they bought a 



282 "WHAT ARE YOU GONNA BUY NEXT, GENERAL MOTORS?" 

big Buddha when they went to Japan, a magnificent thing. It was a very 
spectacular house. In some ways it looked more like a museum than a 
home. There was a lot of marble and a beautiful driveway. Pei was very 
proud of it." 

Ed Bass, one of the four billionaire Bass brothers in Fort Worth, re- 
called visiting the house with his parents, Nancy Lee and Perry Bass, 
while it was still under construction. 

"Anne was showing us around," Bass said with a grin, "and when we 
came to one of the bedrooms, she said, 'And this is baby's room.' I 
thought she was talking about Little Anne, her daughter. Later I discov- 
ered that she was talking about Charles. She called him 'Baby.'" 

Eunice West recalled that for years after the wedding there was talk 
in Fort Worth that Charles had, for a second time, married an older 
woman for her money. 

"I know that people said that," Mrs. West said, "but Anne did not 
help Charles. I know for sure she didn't. Charles had enough money of 
his own when he married Anne. They didn't need each other's money. 
It was that sort of a marriage. She didn't need Charles and he didn't 
need her. So it worked out nicely mat way. G wen, of course, had heipeu 
Charles by putting up her money when he was fighting for the compa- 
ny, but their marriage was entirely different. 

"Anne would entertain for Charles at the big house. She told me once 
while I was visiting there one evening, This is my house. Charles 
doesn't own any part of the house. All he does is pay for the food when 
I entertain for him.' 

"But they had a good marriage. Charles was busy and he didn't have 
a lot of time to go to places with Anne that she wanted him to go. She 
had a lot to take off of him and he had a lot to put up with, too. It 
wasn't all roses, but it was a nice marriage. 

"And she was a lot of fun. I always enjoyed her so much, because not 
having grown up in Fort Worth, there were a lot of people I didn't 
know. I'd get with her and she'd tell funny things that happened to peo- 
ple and about the old families here." 

As for Charles' preference for older women, at least as marriage part- 

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fact that his mother was such a dominant factor in his life while he was 
growing up. Perhaps, he was seeking a surrogate mother to fill the void 
left by the death of Carmen McClain Tandy? 



"WHAT ARE YOU GONNA BUY NEXT, GENERAL MOTORS?" 283 

Phil North, however, believed that Charles' choice in spouses was 
dictated by the fact that he was really married to his business. 

"I think he felt that if he married someone his own age, she would 
demand more of his attention, have him rushing around to parties and 
things that would distract him from business. I really think that he 
didn't want to spend as much time on things that newlyweds do. It just 
didn't appeal to him." 

Anne Burnett Tandy was an outspoken, salty-tongued, strong-willed 
woman who was as accustomed to dominating the scene as was her 
charismatic husband. She was so accustomed to occupying the spotlight 
that she was not above upstaging her husband at social functions. 

When the two were jointly honored with the prestigious Golden 
Deeds Award of the Exchange Club of Fort Worth in 1974, the master 
of ceremonies, Bayard H. Friedman, board chairman of the Fort Worth 
National Bank and a former mayor of Fort Worth, brought down the 
house that filled the ballroom at the Fort Worth Club with a line from 
Confucius: 

"Sad is the hen house when the hen crows louder than the rooster." 

No one, however, laughed more heartily than the two honorees. 

It was a volatile marriage, as one might have expected when two peo- 
ple accustomed to speaking their minds and possessing massive egos 
got together. Sometimes their arguments reached Olympic proportions. 
One night, after a particularly heated encounter earlier in the day, 
Tandy suffered a major indignity, being locked out of the house. Com- 
pounding the affront was that the fact that Bob Hope was an amused 
observer. 

Hope was a frequent visitor in Fort Worth during the '70s as a result 
of his investing in oil deals with independent oil operators like W.A. 
(Monty) Moncrief, Sr. and J. Lloyd Patton. On one occasion, when 
Hope was in town to see Patton about a wildcat he was preparing to 
drill, the two repaired to the Fort Worth Petroleum Club, where they 
were joined by Elton Hyder, Jr. and Tandy. It was a pleasant evening, 
with each of the men around the table in the club's comfortable bar try- 
ing to outdo Hope in telling jokes. Finally, around midnight, Hope said 
he was ready to call it a night. 

"Where are you staying?" Tandy asked him. 

"The Fort Worth Club," Hope responded. 

"The hell you are," Tandy declared. "You're going home with me." 



284 "WHAT ARE YOU GONNA BUY NEXT, GENERAL MOTORS?" 

After demurring initially, Hope finally acquiesced to the insistent 
Tandy. They got into Tandy's Lincoln Continental and drove out to the 
mansion. Hope whistled in appreciation when he saw the edifice. 

Tandy parked the car in the driveway and strode to the front door. He 
inserted the key into the lock. Nothing happened. He kept on trying, hut 
the lock wouldn't budge. Now he tried the door bell It rang loudly. But 
again nothing happened. No one answered the ring. Now a red-faced 
and frustrated Tandy began pounding on the door and calling out for 
someone to open it. There was no response. 

Watching what was transpiring, Hope couldn't resist inserting the 
needle. Leaning his head out of the car, he said to Tandy, "Sure, you 
live here..." 

What had happened was that Anne had ordered the locks changed on 
all the doors of the mansion after her embroglio with Charles that 
morning. Both he and Hope wound up spending the night at the Fort 
Worth Club. 

One of the first things people noticed about Charles after the wedding 
was a change for the better in his tailoring. 

"Anne was always after him about his rumpled appearance," Phil 
North recalled, "and she finally had a commercial pressing machine in- 
stalled in the house." 

She also began a campaign to upgrade his wardrobe by buying suits 
for him. 

Bill Roland, who wore the same size suit as Charles, a 48 long, relat- 
ed an incident when Anne had bought Charles four suits at Brooks 
Brothers in New York. The suits were in the back seat of Tandy's Lin- 
coln Continental when he parked next to Roland's car on the Tandy 
parking lot on West 7th Street. Tandy walked into the office where he 
encountered Roland. 

"Do you want some suits?" he asked. "Anne bought me four suits in 
New York and I don't like any of them. You can have them all." 

Roland wasted no time in taking Tandy up on the offer. 

"The second Mrs. Tandy desired her husband to look more like a mil- 
lionaire industrialist and less like a millionaire Texan, starting with his 

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"You know these damned Gucci loafers aren't built for a man of 
weight," Kornfeld quoted Tandy as complaining. "Yesterday Anne 
made me buy six pairs... and whoee-ee, do you know the price tag?" 

But Mary Frank remembered a company Christmas party of that era 
when Charles showed off his new footwear. 



"WHAT ARE YOU GONNA BUY NEXT, GENERAL MOTORS?" 285 

"We were dancing and he stopped on the dance floor and he said, 
'How do you like my new shoes?' You know, like a kid. And I said, 
'They're really good looking, Charles.' 

"They're Guccis,' he said, and he started dancing." 

Tandy's personality changed along with his wardrobe after his second 
marriage, Miss Frank opined. 

"I think Anne Tandy changed him," she said. "I think he got tougher 
after he married her. You know she could be as tough as one of her 
cowhands, and that's not a reflection against her. She could be the epit- 
ome of grace and charm; but when she had to, she could fight it out 
with her meanest cowhands. She worked a lot on the dress angle for 
Charles. He began dressing better and looking less rumpled." 



On April 9, 1969, Tandy Corporation filed a registration statement 
with the Securities and Exchange Commission for a proposed public of- 
fering" of $40 million of 5 percent convertible subordinated debentures. 
The proceeds, the statement said, would be used to open 410 new Radio 
Shack stores and 50 franchised Radio Shack dealer outlets during 
the 1970 and 1971 fiscal years and finance the construction of two new 
Leonards suburban department stores. The debentures, due in 1989, 
were convertible into common stock at a price of $64.50 per share. 
They were sold on May 20, 1969 through an underwriting managed 
jointly by Eastman-Dillon Securities Company, E.F. Hutton & Co., Inc. 
and Rauscher Pierce & Co., Inc. 

An industry publication that interviewed Lew Kornfeld and Dave 
Beckerman at the time of the public offering, commented: "Radio 
Shack is opening stores so fast that the number has to be counted on a 
daily basis." 

Beckerman noted that prior to Tandy's acquisition of Radio Shack, 
mail order comprised 60 percent of Radio Shack's sales volume. 

"Currently," he pointed out, "since we have put stores out where the 
customers are, mail order is 10 percent of our volume. This is a decen- 
tralized operation and every store handles its own mail order business." 

"We don't refuse mail orders in any store of the Tandy divisions," 
Kornfeld interjected. "We write copy directly at getting mail orders, but 
we don't make a fetish out of the mail order business. We don't say we 
won't return to a centralization of mail order, but we are a specialty 
store operation and the large mail order houses are department stores. 
Mail order requires an apparatus — people to open letters, answer them, 
handle returns. We had this, but we purposely dismantled it and distrib- 



286 "WHAT ARE YOU GONNA BUY NEXT, GENERAL MOTORS?" 

uted it over our stores so that it would not be a significant overhead 
factor for any of them." 

Kornfeld divulged that one of Radio Shack's most popular items, its 
Science Fair electronic kits, was being manufactured in Fort Worth and 
that the company was taking a "hard look" at acquiring other manufac- 
turing facilities in the United States. "There is no limit for manufactur- 
ing in the United States and abroad/' he went on. "Tomorrow is 
beginning. Manufacturing might lead to wholesaling to broaden our 
distribution. There could be an effort as well on imports. We are now in 
all components except TV and consoles and it is fair to surmise that we 
will go into these in some manner in the next year or so... imported and 
made to our specifications. 

"Our philosophy has been," Kornfeld continued, "that we don't look 
on imports as having a connotation of cheap merchandise. We do not 
aspire to carry discount house, low-priced merchandise. We could not 
have nationalized our Realistic brand if we had put price ahead of qual- 
ity and style." 

He cited two examples. 

"Look at our new Fusn in nay mono, ims is a iaKe-oix ou a ctuo- 
pean model, but it's made to our specification. It has FM and AM, AC 
and battery. It has three pre-selection tuning controls and pushbuttons, 
one for AM, two for FM. It's priced at $49.95. Then there's our omni- 
direction high fidelity loudspeaker which we manufacture in Tokyo. It 
will sell for $19.95. Most loudspeakers, to do some good, have to be 
placed against a wall, but this one can be placed on a desk or hung on a 
wall or from the ceiling." 

Summing up, Kornfeld declared, "These things make it easy for us to 
open new stores and not be looked on by the local gentry as 'Who dat?' 
The cognoscenti of electronics know that we've been around and they 
know what track we're on." 

By the close of the 1969 fiscal year on June 30, Radio Shack was op- 
erating 454 retail units in 46 states, including 39 leased departments, an 
increase of 194 retail outlets over the number in operation a year earli- 
er. In addition, there were 3 1 independent dealer stores associated with 

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Shack Division had increased 67 percent to $67 million. It was now ap- 
parent that Radio Shack was becoming the driving force behind Tandy 
Corporation. 



"WHAT ARE YOU GONNA BUY NEXT, GENERAL MOTORS?" 287 

Tandy ? s net sales also showed a healthy 53 percent increase to $180 
million during the year, while net income rose 23 percent to $7.8 mil- 
lion. Earnings per share registered a 40 percent increase to $1.97, ex- 
cluding the 1968 extraordinary tax credit of $1.9 million or 61 cents per 
share. 

"The operating results of the past year are very satisfactory and dem- 
onstrate that vigorous expansion and earnings progress have continued 
to be maintained in good balance," Charles Tandy informed the share- 
holders. "Significant investments also were made to enlarge the produc- 
tion and sales capacity of several of the marketing divisions. These 
enlargement programs are designed to enhance future earnings, and a 
portion of that enhancement should begin to be realized during the 
coming fiscal year. We are pleased with the prospect of establishing 
new records in fiscal 1970." 

The "enlargement programs" to which Tandy was referring were the 
Color Tile and Royal Tile acquisitions and two smaller deals that added 
Creative Decorative Company, Inc., of Glendora, California, and 
Johnal's, Inc., of Miami, Florida, to the fold. Creative Decorative, ac- 
quired for $450,000 in cash and notes, manufactured household decora- 
tive items and distributed them through home furnishings dealers. 
Johnal's, which was bought for $30,000, manufactured household deco- 
rative merchandise which was to be marketed by the Magee Company's 
sales organization. 

Additional acquisitions were in the offing. 

In September, two R.E. Cox & Co. department stores in Texas, one in 
Stephenville and one in Marlin, were acquired at a cost of approximate- 
ly $200,000 in cash and were added to the Mitchell's Junior Depart- 
ment Store Group. 

In October, J.M. Bucheimer Co. of Frederick, Maryland, an 85-year- 
old firm nationally known as a manufacturer of specialty leather goods, 
primarily for sportsmen and for law enforcement uses, was acquired in 
exchange for 12,904 shares of Tandy common stock. Bucheimer, which 
had 1969 revenues of $4.3 million, maintained manufacturing facilities 
in Frederick, Maryland; Cameron, West Virginia; Valencia, California; 
and St. Catherines, Ontario, Canada. 

Also in October, the Woodie Taylor Company of Fort Worth, opera- 
tor of food, candy, soft drink, cigarette and other coin vending machine 
services in the Fort Worth area, including retail, warehouse, plant and 



288 "WHAT ARE YOU GONNA BUY NEXT, GENERAL MOTORS?" 

office spaces occupied by Tandy Corporation, was acquired in ex- 
change for 8,333 shares of common stock. 

Lunching at the Fort Worth Club or at social functions, Tandy would 
glow as people came up to him to ask, "What are you gonna buy next, 
Charles, General Motors?" In truth, Tandy was finding the acquisition 
game a lot more fun than Monopoly. All you needed was lots of stock 
with which to play. With five million shares authorized and 3,981,945 
shares outstanding, Tandy decided he needed a bigger cushion. 

Shareholders learned of his plans to increase the number of autho- 
rized shares from five million to ten million when they received their 
proxy materials for the annual meeting to held at the Sheraton Hotel in 
Fort Worth on November 13, 1969. The additional stock was needed, 
management said, so that it would be available for issuance "in connec- 
tion with future financing, investment opportunities, acquisitions of 
other companies, and stock dividends or distributions." 

The stock market interpreted the news bullishly when it was made 
public on October 14. Tandy stock was heavily traded and reached a 
new post-split high of $63 per share, a gain of $2.25 on the day. 

The increase in the number of authorized shares was overwhelmingly 
approved by the shareholders at the annual meeting, which was marked 
by the absence of the chairman of the board. Jim West presided in 
Tandy's stead. A brief news item had appeared in the Star-Telegram on 
Friday, October 31, reporting that the newspaper had learned Charles 
Tandy had been hospitalized several days earlier "because his doctors 
insisted he should rest." 

In fact, Tandy had been admitted to All Saints Episcopal Hospital on 
the morning of October 26 after suffering a severe heart attack. The 
heart attack was complicated by an acute gall bladder attack that took 
place in the hospital a week later. 

"It was a pretty touchy medical problem because gall bladder surgery 
would have been very difficult and very dangerous," Dr. Robert W. 
(Bobby) Brown, the former New York Yankees third baseman and 
Tandy's cardiologist at the time, recalled. Fortunately, Tandy respond- 
ed to treatment by Dr. Robb Rutledge and the surgery was averted. 

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tober 12, 1972. 

Bobby Brown, who became the president of the American Baseball 
League after he retired from his medical practice in Fort Worth, re- 



"WHAT ARE YOU GONNA BUY NEXT, GENERAL MOTORS?" 289 

membered the irrepressible Tandy conducting business from his hospi- 
tal bed after his 1969 heart attack. 

Brown said of his former cardiac patient, "He would be very cooper- 
ative as long as he could have a phone and as long as his lieutenants or 
his business associates could come in and see him once a day, where he 
could really keep track of his company and keep running it. In essence, 
he would have a board meeting in his room in the coronary care unit 
every morning. The nurses would sit there transfixed just looking at the 
monitors and looking at him in there talking to his people. It was just a 
very unusual circumstance, but that was the only way he'd stay in. And 
as long as he could do that, he was very content." 

Tandy was "totally immersed in his business," Brown continued. "He 
had very few interests otherwise. He didn't like sports particularly and 
he hated exercise. He was basically a sedentary person that loved fig- 
ures and loved reading his Wall Street Journal and looking at his com- 
pany reports and issuing orders for his company. It was all-consuming 
in as far as the business was concerned. His idea of a vacation was just 
to do more business. He was not one to want to go to Aspen or Vail or 
to the Caribbean. He would do it to be with people or if he was under 
duress, but it was only for him to transfer his office to that place and 
continue on with his business. He wasn't interested in the beach or the 
snow or things like that." 

Asked if he had tried to get Tandy to cut down on smoking and 
drinking, Brown replied: "Here again, what you tried to do was have 
him practice moderation, because if you made things too tough for him 
or you made things too difficult for him to adhere to, he just would 
throw over the traces and go his own way. As long as you had reason- 
able limits on him, he would cooperate fully." 

However, in a report he wrote after Tandy was admitted to All Saints 
Hospital on July 21, 1976 with a recurring cardiac rhythm problem, 
Brown noted: "He has not taken care of himself. He has put on some 23 
pounds of weight since his infarction in 1969. He has been ingesting 
too much food, too much alcohol. He smokes 15-20 cigars a day and 
drinks perhaps 15 cups of coffee per day." 

Tandy, Brown said, was a probable candidate for by-pass surgery, but 
refused to have any coronary angiography. 

"He didn't want to know how bad or how good his coronary arteries 
were," Brown revealed. "He told me right off the bat that he didn't 



290 "WHAT ARE YOU GONNA BUY NEXT, GENERAL MOTORS?" 

want any diagnostic tests where they put dye in your coronary arteries, 
because he wasn't interested in any kind of surgery." 

The coronary infarction and gall bladder attack in 1969 had kept 
Tandy hospitalized for nearly a month until November 21, but as he be- 
gan feeling stronger and was moved from the coronary care unit into a 
two-room hospital suite, he immediately converted his new surround- 
ings into an auxiliary office. 

Rachel Barber recalled being summoned to the suite to report on how 
she was progressing on an assignment for Meacham's that Tandy had 
given her. 

"He had a monitor on his heart, but he was keeping up with every- 
body," she said, "always asking questions, 'How is this going, how is 
that going?'" 

Bill Roland walked into the suite one afternoon to find Tandy, 
hooked to a monitoring device, sitting on his hospital bed and chatting 
animatedly with Jim West, Bill Michero and Douglas Manning, a 
Tandy vice president. 

"I'd seen Brad Corbett coming down the hall with a young woman 
dressed in a sort oi a tow sacK, Koiaua bam. juicu oiau pau^^u. a.t uxv 
door and brought the girl in." 

Brad Corbett was then the chairman of the board of Robintech, Inc., 
and later would become the majority owner of the Texas Rangers 
American League baseball team. He and Tandy had become close 
friends. 

"Brad was carrying a bottle of champagne and he brought the girl 
into the suite," Roland related. "Before we knew what was happening, 
the girl took off her dress. She had a bikini on underneath. Then she sat 
down on Charles' lap and put her arms around him." 

Janet Lesok, then a newly-hired 21 -year-old secretarial employee 
who later became Tandy's personal secretary, recalled her introduction 
to her future boss. 

"I was a 21 -year-old messenger-type girl, taking his mail and the 
P&Ls to him in his suite at All Saints. The first time I saw him, Mrs. 
Tandy was there, and he was talking on the telephone and you could 

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Each time she arrived at the suite, her arms full of papers, Janet had 
to talk her way past Anne Tandy. 

"Mrs. Tandy didn't want people bothering Charles with company 
business, but there was no way she could stop it," Mrs. Lesok said. 



"WHAT ARE YOU GONNA BUY NEXT, GENERAL MOTORS?" 291 

When Tandy left the hospital, he was ordered by Dr. Brown to re- 
main away from the office for several weeks. After soaking up some 
Arizona sunshine, Charles returned to Fort Worth and began working 
out of his apartment on Curzon, which he had retained as a retreat after 
his marriage. 

"He used the apartment as an office and he immediately began 
wheeling and dealing;' Janet Lesok recalled. "We worked off a little 
orange card table in the den. His maids, Annie B. and Laura, who had 
been with him for years, ran the apartment and prepared his lunch. I ran 
between West 7th Street and Curzon four or five times a day. Charles 
was crazy about the maids and always took real good care of them. He 
put them in the employee savings plan and they had company cars. I re» 
member the time Annie B. got into financial problems and got out of 
the employee savings plan, cashed it in. He hit the proverbial ceiling 
when he heard about it. 'This is not set up to be borrowing from, like a 
bank,' he told her. He went on and on. He saw to it that she eventually 
got back into the plan." 

The maids loved to watch soap operas on television, which reminded 
Janet of an incident she said typified Tandy's lack of pretentiousness. 

"One day when Charles had a high-powered meeting going on at the 
apartment, I walked into the kitchen at lunch time. The maids had the 
TV going, so I joined them. There we were, all three of us, watching 
the soap opera with our elbows on the table and our bottoms sticking 
out behind us. 

"Charles walked into the kitchen and said, Tf I'm not disturbing you 
ladies from all this important business...' 

"And with that, he dropped his pants and stood there in his drawers. 

"T've ripped my pants,' he said, 'and I wonder if one of you ladies is 
not too busy to sew them up so I can get back to my goddamned 
meeting...' 

"I was in shock. Those two ladies never even blinked. They just took 
the pants. I never took my eyes off the television set. And after they re- 
paired the pants, he just put them on and went back to his meeting. He 
didn't miss a beat, never took the cigar out of his mouth." 



Chapter 19 

"Bernie, I'll Build You Your Own 
Synagogue " 



Tandy's brush with the Grim Reaper had at least one salutary conse- 
quence. It convinced him that he could no longer put off moving the 
Radio Shack headquarters from Boston to Fort Worth. 

On numerous occasions over the years, Tandy had broached the sub- 
ject to Lew Kornfeld, whose response was predictably negative. The 
fact that Tandy had not pushed the issue was a strong indication that he 
did not consider the move important enough to risk losing Kornfeld and 
other key members of the Radio Shack team. So he had continued the 
wearing regime of dividing his time between Beantown and Cowtown. 
But in the aftermath of his latest heart attack, he decided the time had 
come to put his foot down. 

"He'd been talking to me about moving to Fort Worth since 1963," 
Kornfeld remembered. "But I loved where I was living in Belmont, a 
Boston suburb, and so did my family. No one else among our key peo- 
ple in Boston wanted to move to Fort Worth and I told that to Charles 
each time he brought up the subject." 

By the fall of 1969, however, the growth of Radio Shack put a strain 
on its cramped facilities in Boston. Kornfeld found himself facing the 
prospect of having to rent additional office space for his buyers and for 
the rapidly-expanding advertising department. For the first time, he 
found himself actually considering that it might make sense to consoli- 
date all of the Radio Shack operations in Fort Worth rather than expand 
into new office space in Boston. But he still wasn't convinced when 
Tandy again brought up the subject after his heart attack. 

"I was visiting him in the hospital," Kornfeld recalled, "and he said 
to me, T wish you'd move here.' And I answered, 'Oh, Charles, we've 
been over this before.'" 



293 



294 "BERNIE, I'LL BUILD YOU YOUR OWN SYNAGOGUE" 

To which Tandy replied, "I guess you can't make people do what 
they don't want to do." 

As Tandy spoke those words, Kornfeld related, "I saw an awful blip 
appear on the monitoring machine to which he was hooked up. That's 
when I knew I was going to move. I don't want to overdramatize what 
happened. Keep in mind that I already was facing the spectre of having 
to move the Boston offices, and the fact was that things were being run 
more and more from Fort Worth. But I couldn't help being frightened 
by what I saw on the machine. I asked Charles to excuse me for a 
minute and I walked to a nearby public telephone and called my wife. 
"'Ethel,' I told her, 'Charles wants me to move to Fort Worth and I 
owe it to him to do it."' 

Mrs. Kornfeld, however, extracted a promise from her husband that 
he would insist that the move not take place until the following June, 
when their son was due to graduate from high school. 

"At that point," Kornfeld said, "it occurred to me that this was a pro- 
pitious time to hit Charles with another matter. So I went back to his 
hospital suite and told him I would move to Fort Worth after my son's 
graduation in June 1970. Then I said there was something else I wanted 
to talk to him about." 
"What's that?" 

"I think you should make me president of Radio Shack." 
There was a brief pause as Tandy mulled it over. Then he said, 
"Okay." 

The prospect of eventually having to relocate to Texas had been 
hanging over the Radio Shack offices like the sword of Damocles ever 
since 1963. When the sword finally fell on the 20 families who were 
asked to make the move, their reaction was less than euphoric. To 
them, Fort Worth still seemed like a frontier outpost and Texas present- 
ed a totally alien culture. 
"We had to do a selling job," Kornfeld said, "and it wasn't easy." 
Kornfeld and Bernie Appel and their wives were invited to stop over 
in Fort Worth while en route to Acapulco on a brief vacation in Decem- 
ber, 1969. 

"We couldn't have chosen a worse time," Kornfeld said. "We'd been 
telling our wives about the great climate in Fort Worth. But, as luck 
would have it, we arrived in a blizzard. The weather in Fort Worth was 
even worse than what we'd left behind in Boston." 

"It was the week before Christmas, and Charles had us over to the big 
house for a big dinner," Bernie Appel said. "After dinner, I got locked 



"BERNIE, I'LL BUILD YOU YOUR OWN SYNAGOGUE" 295 

in a room with Phil North and James West and they beat the hell out of 
me. They really worked on me to convince me to move to Fort Worth. I 
told them some of the things that were worrying me about the move, 
and that's where a funny incident happened between me and Charles 
Tandy. 

"The morning after the big dinner," Appel related, "Charles called me 
at Green Oaks Inn. I remember it was a very cold, very windy morning. 
He got me on the phone and he said, 'Bernie, what's this bullshit I hear 
that you don't want to come to Fort Worth?' 

"My answer was, 'Charles, I didn't say I didn't want to come to Fort 
Worth. What I said is that I want to meet with the rabbis and the head 
of the community center and find out if I can make some sort of a Jew- 
ish life here for my children.' 

"That's when he said to me, 'Bernie, if you don't like the synagogue 
we've got here, I'll build you your own."' 

That rejoinder, in Appel' s opinion, typified Charles Tandy. 

"He was a man who didn't have a biased bone in his body, a lovely 
human being who really cared about people, no matter how rough he 
could be on you." 

"He was very proud of us," Appel continued. "After we arrived in 
Fort Worth, he introduced us to people in the community. He said he 
wanted us involved in the community. He felt that it was important that 
his people should be involved in community activities, in their church- 
es, the Arts Council. At a party he gave to introduce us to Jewish com- 
munity leaders, he told Arthur Ginsburg, a prominent Fort Worth 
businessman, T'm gonna make these people wealthy, so you take good 
care of them.'" When Appel wanted to join a country club, Tandy was 
his mentor and his reference. "He called the manager of the club," Ap- 
pel said, "and told him, 'Never mind about any kind of a waiting list. 
You take good care of my executives.' He went to bat for us every sin- 
gle time. Then he'd come in and beat the hell out of you. But that was 
the way he taught you." 

Before the decision to move the Radio Shack headquarters to Fort 
Worth was finalized in late 1969, Tandy was engaged in another acqui- 
sition project, this one involving Allied Radio Corporation of Chicago, 
then the nation's number one distributor of electronics products, with 
sales of approximately $90 million. 

Tandy had made a pass at Allied Radio back in the early '60s prior to 
his takeover of Radio Shack and had been curtly rebuffed. Allied sub- 
sequently had been taken over by James J. Ling, the swashbuckling 



296 "BERNIE, I'LL BUILD YOU YOUR OWN SYNAGOGUE" 

corporate raider from Dallas, whose highly-leveraged empire was now 
hemorrhaging red ink. Faced with having to sell off some of his subsid- 
iaries to satisfy his creditors, Ling approached Tandy about taking Al- 
lied Radio off his hands. 

"The problems of the Ling organization were getting more and more 
publicity," Bill Michero recalled, "and it was apparent that he had to 
get rid of some of his assets. We were so busy with our own business 
that we wouldn't have pursued the Allied thing if Ling hadn't gotten 
into so much financial trouble." 

It was easy to understand Charles' interest in adding Allied Radio to 
the Tandy fold. 

As Lew Kornfeld explained, "He adored the idea of buying out this 
prestigious company that was bigger than we were and was also our 
largest direct competitor." 

Tandy also saw in Allied an immediate entry into the Chicago area 
that Radio Shack had not yet penetrated in a major way. Allied, at the 
time, had 41 company-owned retail stores located primarily in the Up- 
per Midwest, plus a national mail order business. 

"Charles thought it was a natural way for us to occupy a whole new 
country," Kornfeld pointed out. "We were expanding rapidly by open- 
ing new stores on our own, but an even quicker way to expand was to 
buy already existing stores." 

Kornfeld was in Tokyo on a buying trip in early April of 1970 when 
he was awakened from a sound sleep by the ringing of the telephone in 
his hotel room. 

"It was 3 o'clock in the morning, a terrible time for me in Tokyo, but 
a convenient time for Charles in Fort Worth," Kornfeld noted. 

"Guess what I just did?" Tandy asked. 

"You've bought Allied." 

"Yep." 

The telephone call provided Kornfeld with what he termed "a final 
glimmer of opportunity" to head off the scheduled Radio Shack move 
to Fort Worth. 

"Charles," he said, "as long as you now have Allied and they already 

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11U-W tilVIX XXVC4ViV^l*CtJL w\^JLU> vuvuutiu^vw, *<,*.*. j *~~** - •• - ** . - ~ 

to Chicago instead of Texas?" 

There was silence on the other end of the line. Then Tandy said, "No, 
you're still coming to Fort Worth." 

The announcement that Tandy Corporation had purchased the busi- 
ness of Allied Radio from LTV Ling Altec, a subsidiary of Ling- 



"BERNIE, I'LL BUILD YOU YOUR OWN SYNAGOGUE" 297 

Temco-Vought, Inc., of Dallas, hit the financial press with a surprising 
impact on April 14, 1970. 

The size of the transaction — approximately $25 million, of which 
$ 1 1 million was in cash and the remainder in the assumption of Allied 
Radio liabilities — was the largest in Tandy history. 

"We had to sell some stock the following year to pay off the obliga- 
tion," Bill Michero noted. 

Commenting on why he had bought Allied Radio, Tandy told a re- 
porter from Investor's Reader, "We have done an entirely different ac- 
quisition job than Litton or LTV or Boise. We have sought things that 
were similar or of a compatible nature. The profit goes up faster and 
you take less risk when you put things together right. Right now, the 
energies and efforts of our company are centered on electronics. Allied 
fits so perfectly with Radio Shack that when you put them together you 
have got a good match." 

The article quoted Tandy as stating he had decided to eliminate cam- 
eras from the Allied stores in line with his firm belief in specialty mer- 
chandising. 

"You wouldn't go to Wolfe's Nursery to buy ladies underwear," he 
said. 

Looking back on the Allied Radio acquisition, Lew Kornfeld said he 
was unalterably opposed to the deal and that he tried, in vain, to talk 
Tandy out of making it. Kornfeld compared Allied Radio to the Magi- 
not Line in France in World War II. 

"They were entrenched in an obsolete retailing technique, still stick- 
ing mostly to mail order. I thought we could move around them easily." 

A decision now had to be made about what to do with the Allied Ra- 
dio name. 

"Whatever we do," Tandy had told a reporter, "we will certainly con- 
tinue the Allied name. We will maintain the name with our own identi- 
fication or we will combine it either with the corporate Tandy name or 
Radio Shack. The name has too much going for it to scrap." 

The announcement that the name of the Radio Shack Division of 
Tandy Corporation had been changed to Allied Radio Shack was made 
on May 5, 1970. 

One of the first things Kornfeld did after moving to Fort Worth and 
assuming the presidency of Allied Radio Shack was to buy vanity li- 
cense plates for his car. They read, "ARS-1." 

Shortly after that, Tandy walked into Kornfeld' s office. 

"I just saw your car out front," he said. 



298 "BERNIE, I'LL BUILD YOU YOUR OWN SYNAGOGUE" 

"Oh, yeah, my ARS-1." 

"Kornfeld,'' Tandy said, "you don't even know how to spell ass." 

Kornfeld took over his new job with a sense of deja vu. 

"Ironically," he said, "I now had back all of the problems of the 1958 
to 1963 period. I had all of the name brands back. I had all the repair 
problems Radio Shack used to have. I had all of the old mail order 
problems. I had all of Allied' s private label stuff. And I had an industri- 
al division to contend with again after we had finally gotten rid of 
Radio Shack's. I had everything back. 

"But we all finally agreed after some experimentation that we would 
change Allied to all private label merchandise, to 2,400 stockkeeping 
units, and that the Allied stores would operate the way Radio Shack op- 
erated. So the net result of the acquisition would be that we would wind 
up with 41 new Radio Shack stores in Illinois and wherever the Allied 
stores were located." 

Allied' s substantial mail order operations were quickly dismantled 
for the same reason that Tandy had taken Radio Shack out of the mail 
order business. So much of the electronics equipment being shipped at 
the time was extremely fragile and highly susceptible to breakage. In 
addition, Allied' s industrial division was moved to Fort Worth as a new 
Tandy division, with George Steeves, a Radio Shack employee for 21 
years, being named president of the new Allied Electronics Industries 
Division. The division later was sold. 

One of those intimately involved in the tedious process of meshing 
Allied with Radio Shack was John Roach, who was then manager of 
the corporate computer center. To him fell the responsibility of inte- 
grating the Allied operations into the Tandy computer systems. Thus, 
he found himself flying between Fort Worth and Chicago on a regular 
basis for several months. 

Stamped indelibly in Roach's memory is what transpired during his 
first visit to the Allied offices in the company of Charles Tandy 

"When we arrived at the Allied headquarters, we were told we had to 
put on identification badges," Roach remembered. "The guard at the 
front desk handed Charles a badge. He didn't like it, but he put it on. 

Roach grinned at the recollection of what happened when Tandy 
stormed into the office of Allied president Shelby Young and saw that 
the 35-year-old executive wasn't wearing an ID badge. 

"Charles' first words were, 'Where's your goddamn badge?' 



"BERNIE, I'LL BUILD YOU YOUR OWN SYNAGOGUE" 299 

"This was to a guy who's been working for him now for only several 
hours and has never met him before," Roach said. 

After the initial flurry of activity subsided, Roach had a respite of 
several months until a major accounts receivable problem cropped up in 
Allied's industrial division. 

"It became my problem as far as Charles was concerned," Roach re- 
ported, "because accounts receivable are run off on the computer. The 
fact that Allied had sold things to people that they shouldn't have and 
didn't collect from them the way they should have were all secondary 
to Charles. So, he tried to make me feel that it was my problem. My 
sense is that he didn't have anybody else to place the blame on." 

For the next six months Roach flew to Chicago every other week, 
working with the Allied accounts receivable people to get the accounts 
in reasonable shape, "the best that I really felt I could," he added. 

But during that six-month period, the fiscal year-end bonus time 
arrived. 

"For some reason," Roach related, "Charles and I had a lot of trouble 
about bonuses, particularly in the early years. His feeling was that com- 
puter people were just staff, that they were not contributing to making 
sales, and that they should be paid like staff people. Yet, he did every- 
thing he could to keep you from being a staff person by forcing you 
into operations." 

For the first few years of his employment, Roach permitted Charley 
Tindall and Billy Roland to submit his bonus request to Tandy for his 
approval. But, he added, as time went on, he decided that he would be 
better off bargaining for himself. 

"They weren't doing all that great for me," he noted. 

"So I'd go up to see Charles and I'd give him a bonus schedule for 
everyone in the computer center," Roach continued. "Typically, it 
would take four to six hours talking about what we ought to be doing as 
a company, then go back to talking about the bonus schedule a little bit 
and discussing how the bonus tied into the big plan. Finally, arduously, 
I'd get the schedule approved, with a lot of help from Lew Kornfeld 
and Bill Nugent and Carroll Ray and others. They'd keep telling 
Charles he ought to pay us what I was asking and Charles would keep 
trying to hold the bonus down. 

"One morning during the Allied thing," Roach went on, "I went to 
see Charles with my bonus schedule. I was due in his office at 8:30. I 
got there at 8:30 sharp. He arrived about 1 p.m. That was typical and 



300 "BERNIE, I'LL BUILD YOU YOUR OWN SYNAGOGUE" 

didn't come as any great surprise to me at all. So there we were, just 
the two of us, all that day, just arguing back and forth on every subject 
known to man, occasionally having a fairly heated discussion. Finally, 
at about 7 o'clock, he says, 'Okay, dammit, just write down whatever 
number it is that you want.' So I wrote down a number and he said, 
'Great, now get back to work.'" 

This was around August 15, Roach recollected. Several days later, as 
the people in the corporate office began receiving their bonus checks, 
Roach became concerned when his check failed to arrive. He began 
making inquiries, and finally asked Janet Lesok, Tandy's secretary, if 
she knew what had happened to his check. 

"He's got it," she informed Roach. "He asked me for it." 

"Now," Roach revealed, "you didn't necessarily see Charles every 
day. Particularly, when he was staying out at the apartment, you might 
not see him for a week or two. Several weeks went by and the check 
didn't show up. More time passed and the check still didn't show up. 
Finally, I managed to get in to see him and asked him about the check, 
and he told me, 'Well, you're not through with last year's work yet. 
The accounts receivable isn't finished.'" 

Roach now had reason to be concerned. 

"We were all indebted for stock at the bank," he recalled, "and I 
couldn't pay off my note that was due. Time went along. One day I 
went to Janet and I said, 'Why don't you tell Charles to call the bank. 
They're getting tired of my excuses and I don't think they believe me 
anymore.' I was saying that because I wanted to get that bonus check 
loose. I wasn't having as much trouble with the bank as I was having 
trying to get the check loose. Meanwhile, while Charles was holding 
court with various people in his office every day, he'd pull my damn 
check out of his pocket and wave it around at everybody and say, 
'Now, if you were tough, if you were a real boss, if you had guts, you 
could handle your people like I do. I get my work done.' Then he'd put 
my check back in his pocket." 

Roach continued, "September went by. No check. Keep in mind that I 
was getting more than half of my pay for the whole year in the bonus, 

Kowuoo T r.wAr ernt smv hnse nav increases Now. it was months Dast 

the end of the fiscal year and still no bonus. Finally, one day, when 
Charles and Bill Nugent were flying up to Chicago on the company 
plane, I hitched a ride and went along. They attended to their business 
and I went to Allied and worked there all day and then met them back 
at the plane that night. 



"BERNIE, I'LL BUILD YOU YOUR OWN SYNAGOGUE" 301 

"After one or two bourbons, Charles finally pulled the damn check 
out of his pocket. It was dog-eared, wrinkled, kind of curled up. He 
slammed the check down on the little table of the airplane and said, 
'Here, take the damn thing. You haven't earned it, but I don't want to 
hear any more about it.'" 

* # * 

The Allied Radio acquisition by Tandy Corporation created a fire- 
storm of media speculation about the implications of the merger for the 
consumer electronics industry. 

Audio Times, a major industry publication, said the purchase had 
caused "shock waves from Fort Worth to Chicago, with reverberations 
from coast to coast." Audio Times added, "At one time, Allied Radio, 
with its huge catalog operation, was the leading retailer of high fidelity 
components. Today, with 41 retail stores and a major catalog operation, 
it is still one of the biggest retail audio operations in the nation. Some 
observers believe the combined Radio Shack-Allied operations might 
account for as much as 10 percent of retail high fidelity component 
sales. 

"Allied Radio and Radio Shack were rivals for many years, principal- 
ly in mail order. Each restricted its retail operations to a limited geo- 
graphical area. After Charles Tandy bought Radio Shack, he expanded 
the small chain into the largest chain of retail electronic stores in the 
world. Radio Shack operates 660 company-owned stores and has 80 
franchised affiliates. Allied began a rapid expansion of its company- 
owned stores in the last two years and has plans to continue opening 
many new units." 

Merchandising Week, a Chicago-based publication, trumpeted, "With 
its purchase of Allied Radio last week, Tandy Corp. of Texas has 
emerged as the powerhouse in the retail audio field, and the move dra- 
matizes some significant changes taking place in that area. Tandy al- 
ready owns Radio Shack, a division with 660 wholly-owned retail 
stores and some 80 franchise outlets and leased departments. Allied 
now has 41 retail stores mainly located in the Midwest. The only re- 
maining competition in the field of any size is Lafayette Radio, which 
now has 34 stores along the Mid-Atlantic region of the country." 

Home Furnishings Daily warned: "Tandy Corp.'s purchase of Allied 
Radio Corp., Chicago, could create a private label giant and result in 
the loss of millions of dollars of business for United States brand name 
stereo manufacturers. This was the fear of manufacturer-suppliers of 
the Allied chain during the Consumer Electronics Show in Chicago. 



302 "BERNIE, I'LL BUILD YOU YOUR OWN SYNAGOGUE" 

Most of the suppliers felt it is a 'foregone conclusion' that Allied will 
eliminate U.S. brand components and compacts from its national con- 
sumer catalogs by 1971." 

The newspaper quoted a manufacturer, "What could really be scary is 
that combined buying clout. Whew! They'll be able to command even 
more respect from Japanese manufacturers." 

Lew Kornfeld said he brought up the possibility of anti-trust prob- 
lems arising from the Allied acquistion during his middle-of-the-night 
telephone conversation with Tandy from his Tokyo hotel room. 

"Anti-trust is liable to come after you," he said he told Tandy. 

Tandy's confident reply was, "You know how we're going to handle 
that? We're going to put these two companies together in such a way 
that the government won't know where to start looking." 

As it turned out, Tandy's confidence in his ability to thwart the anti- 
trust forces was somewhat overblown. 

For one thing, Herschel C. Winn, who was the first in-house attorney 
hired by Tandy Corporation in 1968 and later became a senior vice 
president and general counsel, pointed out that the Allied acquisition 
was made during a penou when tiie iCuCiai government was very ac 
tive" in anti-trust cases. 

John Roach noted that the three dominant consumer electronics com- 
panies at the time were Allied Radio, Lafayette Electronics, and Radio 
Shack, so that it was not particularly surprising that a merger between 
two of the top three firms caused the watchdogs in Washington to begin 
licking their chops. 

Whatever the case, the Department of Justice lost no time in zeroing 
in on the deal, requesting its Anti-Trust Division office in Chicago to 
look into the potential restraint-of-trade ramifications of the acquisition. 

On May 25, 1970, only a month after the announcement of the merg- 
er, Electronics News, an industry publication, reported that a letter had 
gone out over the signature of Richard W. McLaren, an assistant United 
States attorney general, to some 25 companies requesting "facts and 
figures on the consumer electronics specialty market and soliciting rea- 
sons why the merger would lessen competition or tend to create a 



mnnnnnlv ' 
^r 



Among the companies contacted were Lafayette Radio Electronics, 
Harvey Group, Harrison Radio, Arrow Electronics, Gem Electronics, 
and Burstein-Applebee, the publication said. 

"Spokesmen at the firms declined to reveal their position regarding 
the Justice Department's request," the story added. "It was apparent. 



"BERNIE, I'LL BUILD YOU YOUR OWN SYNAGOGUE" 303 

however, from several firms that the Tandy deal engendered some ap- 
prehension." 

The article quoted one company spokesman as saying, "It will cer- 
tainly give Tandy more leverage in dealing with suppliers. The compa- 
ny is now much bigger than many of the companies whose products it 
is carrying. You can figure out the implications yourself." 

In an anti-trust matter, Winn pointed out, "You have to have a mar- 
ket. So the Justice Department conceived the idea of a consumer elec- 
tronics specialty store market that applied to Tandy." 

On May 16, 1971, the U.S. Department of Justice filed a civil anti- 
trust suit against Tandy Corporation in federal district court in Chicago, 
charging that the Allied Radio acquisition violated the anti-merger sec- 
tion of the Clayton Anti-Trust Act. The suit further charged that 
Tandy's acquisition of Allied' s electronic products business illegally 
eliminated competition between the two companies; that it might make 
it more difficult for new competitors to enter the business, and that it 
might encourage similar mergers. The government asked that Tandy be 
ordered to divest itself of the assets it had acquired from Allied and that 
it be enjoined for five years from acquiring any other electronics prod- 
ucts retailer without prior approval of the Justice Department or the 
Court. 

"At the same time," Lew Kornfeld reported, "we began emptying the 
Allied stores of their merchandise and opened Radio Shack stores 
nearby." 

Herschel Winn added, "We were opening new stores at a rapid rate 
and it was economically better for us to agree to a settlement. Why 
spend a lot of money fighting the case, when you could open up that 
many more Radio Shack stores very quickly?" 

On December 28, 1971, Tandy Corporation announced it agreed to 
the entry of a consent decree filed with the United States District Court, 
Northern District of Illinois, not to contest the complaint filed against it 
by the Justice Department. The decree, which was entered on January 
28, 1972, called for the divestiture within two years of the 36 remaining 
retail stores acquired as part of the Allied purchase. 

Under the terms of a plan approved by the Justice Department, 27 of 
the stores were sold to Schaak Electronics of Minneapolis between Jan- 
uary 14, 1974 and June 4, 1974. 

"The sale was structured so that Schaak Electronics could buy the 
stores in steps," Winn recalled. "They were supposed to buy them in 
two steps, but they couldn't manage the last bunch of nine stores. So 



304 "BERNIE, I'LL BUILD YOU YOUR OWN SYNAGOGUE" 

we went back in and had the decree amended. We just ran out the store 
leases and didn't reopen in those nine locations. That's the way it was 
ultimately resolved." 

The divestiture was no great blow, Winn pointed out. During fiscal 
1973, the 36 Allied Radio stores had aggregate sales of $9.8 million 
and income before taxes, interest and administrative expenses of only 
$257,180. 

Charles Tandy took note of the Allied Radio problem at a store man- 
agers' meeting in Fort Worth in 1971. 

"Fm waiting for the federal government to tell us what they want us 
to do," he told the gathering at Green Oaks Inn. "You never make any 
money fighting fights. We won't fight unless they want us to give away 
300 stores. Then I'll get into a scrap. But if they ask us to divest our- 
selves of 38, 39 stores, we've already done the job. We've got the mar- 
ket. We've done what we wanted to do." 

In a talk at Brigham Young University in March, 1973, Tandy 
touched on the anti-trust proceedings. 

"We bought Allied Radio Corporation in 1970," he declared, "but the 

rtAwawman+ Viae acV^H no in Hiwpct nnrei»1vf»C fvf it AllipH h^S ^7 StorpSt 

against our 2,000, so it is a rather unfair charge to say we are restrain- 
ing trade. I mean, 37 stores just can't do that much business against 
2,000! But I'm not going to fight the government. I'll go right along 
with the federal decision like a lamb." 

Meanwhile, Tandy's nonelectronics acquisition efforts also contin- 
ued, with the purchase on April 30, 1970, of Collins of Texas, Inc., a 
manufacturer and marketer of quality ladies' handbags and related ac- 
cessories of leather, fabric and wool, with annual sales of $2.3 million. 
The purchase price was 45,815 shares of Tandy stock valued at $1.5 
million. 

Later in the year, when it became apparent that more management 
depth was needed at the corporate level, five new Tandy groxip vice 
presidents were named in September, 1970. They were David Becker- 
man, Douglas Manning, Lewis Shows, Harlan Swain, and John Wilson. 

Prior to his promotion, Beckerman had been vice president of Radio 
Shack's Eastern Region; Manning, vice president and general sales 
manager of Tex Tan Western Leather Company; Shows, president of 
the Tex Tan Welhausen Division; Swain, president of Tandy Leather 
Company and American Handicrafts Company; and Wilson, vice presi- 
dent of Tandy Leather Company and American Handicrafts Company. 



"BERNIE, I'LL BUILD YOU YOUR OWN SYNAGOGUE" 305 

The promotions were primarily the result of concern over Tandy's 
health, but they also served to mollify some hurt feelings over Lew 
Kornfeld's ascendancy to the top Radio Shack job. 

In an interview published about a month after the promotions were 
announced, Tandy said the new group vice presidents had been elected 
as part of a reorganization designed "to bring sales up to $600 to $700 
million. We have taken the best men from our operating divisions. 
They are all in the late 40s or early 50s." 

A proud and seemingly fit Charles Tandy presided at the annual 
meeting in Fort Worth on November 12, 1970. Tandy elaborated on the 
record highs of $253.3 million in net sales and $9.1 million in net in- 
come that had been previously announced and lauded "another out- 
standing performance" by the Allied Radio Shack Division, whose 
sales had accounted for approximately 40 percent of the company's to- 
tal sales volume and had contributed approximately 54 percent of the 
sales increase. 

"Counting the Allied Radio contribution," he added, "the Allied 
Radio Shack Division's sales rose 55 percent to $101 million during fis- 
cal 1970." 

At the fiscal year-end on June 30, 1970, the number of retail outlets 
of all Tandy divisions had reached a total of 991, up from 710 a year 
earlier. Most of the gain came from the Allied Radio Shack Division 
which closed the year with 674 retail units, up from 454 the year be- 
fore. This included Radio Shack's entry into the Canadian market with 
the opening of three stores in Toronto in June, plus 99 associate (fran- 
chise) stores. 

"Strong emphasis will continue to be placed on consumer electronics 
in fiscal 1971," Tandy told the shareholders, "with current plans calling 
for the opening of 300 additional company-owned and associate Allied 
Radio Shack outlets during the year." 

Tandy's once "impossible dream" of 1,000 stores was about to be- 
come a reality. 



Chapter 20 

Zsa Zsa Misses a Ribbon-Cutting 



Jim Buxton's relationship with Charles Tandy dated back to 1955 
when he clerked in the Tandy Leather Company's store in Amarillo. It 
had been less than amicable at its best and ...stormy at its worst. There 
was a two-year period during the early 1960s when the two didn't 
speak. 

"This was while I was managing the Tandy Mart in San Antonio," 
Buxton explained. "Charles had written my bonus plan out on a slip of 
paper at the start of the year. If he'd have let the dam thing alone, I'd 
have been paid more than he was that year. Of course, he couldn't tol- 
erate that. So he tore it up. He'd never changed anybody else's bonus 
before, but he changed mine. We got a little crosswise over that. We 
didn't speak for about two years. I recall going up to Fort Worth for his 
father's funeral, and I never even went by the office. Dave Tandy and I 
had had a real rapport, and Charles didn't especially like that, either," 
Buxton asserted. "When I'd have an appointment to see Charles in Fort 
Worth, Dave would spot me and call me into his office and we'd chew 
the fat for a couple of hours. Charles would get real mad over that." 

"Mad" was the operative word in Buxton's relationship with Tandy. 

"He motivated me by getting me mad," Buxton said. "I'd get mad 
and I'd get just like a bulldog. But he knew I liked to make money, so 
he gave me a rabbit to chase and he knew I'd chase it. In all the years, 
he never set foot in one of my stores except once when he was in San 
Antonio working on buying Tex Tan. He'd rented a car and he came 
into my Tandy Leather store and said, Take me to the airport."' 

So it came as a total shock to Buxton when Tandy handed him the 
plum of opening the milestone 1,000th Radio Shack store in the spring 
of 1971. 



307 



308 ZSA ZSA MISSES A RIBBON-CUTTING 

Buxton was dispatched to California in March 1968 to try to breathe 
life into the ailing Western Region. Under his direction as regional 
manager, the number of Radio Shack stores in the region had increased 
nearly five-fold from 33 stores to 150 stores by November 1970. 

Whether the distinction of opening the 1,000th Radio Shack was giv- 
en to him in recognition of the job he had done on the West Coast or 
was merely simple chance, Buxton never discovered. It was typical of 
Tandy, he figured, to hand him the coveted assignment without telling 
him why. But when he spoke about the store that opened in Garden 
Grove in May 1971, it was with untypical warmth. 

"It was a gorgeous store, the prettiest store the company had up to 
that time," he said. "Charles was really excited about the opening. He 
was planning to attend the opening ceremonies and bring a bunch of 
people with him on the company jet. But something went wrong with 
the plane and he didn't make it. Maybe it's just as well. It could have 
been a real fiasco. We had lined up Zsa Zsa Gabor to cut the ribbon and 
we had advertised it extensively. So there were thousands of people at 
the ribbon-cutting. But no Zsa Zsa. We were going out of our minds 
about what to do. Fortunately, I had a real bright advertising man ^y 
the name of Bernie Elfman whom I'd hired and brought out to the West 
Coast from New York. He was one of the best in the business." 

Elfman now rode to the rescue. 

"We had a real cute receptionist in the office, a redhead, cute but 
dumb," Buxton continued, "and when we finally gave up on Zsa Zsa 
getting there, Bernie went over to the redhead and told her, 'Stand up 
on that desk.' So she stood up on the table. She was wearing a long 
skirt, and Bernie took a pair of scissors and made a mini-skirt out of it, 
or, to be more accurate, a mini-mini skirt, by whacking the bottom of 
the skirt off Then he took her outside to cut the ribbon and we didn't 
have a single complaint. Zsa Zsa called 30 minutes later and said, 'I've 
hurt my back, I can't make it.' I informed her the show had gone on 

without her." 

* * * 

With the Radio Shack store opening program rolling along in high 

;._ J...S. ......... ,!.-.«. *.„*■' ^-.- , 'U„.«, r .-.-, 4-r* o>nn^*-f ifo£»1-f TJTo^Tr TYyOVWr T? QHIO 

gear, an iiiuiguiug qucsuun u&gau tu aoout iwvn. nvn * A «** V **.«,«* w 
Shacks was enough? How many stores could he profitably digested? 
Bill Michero, who had been promoted to vice president and corporate 
secretary, addressed the question in a talk to the St. Louis Society of 
Financial Analysts on April 1, 1971. 



ZSA ZSA MISSES A RIBBON-CUTTING 309 

"Our projections are for expansion of the Consumer Electronics Divi- 
sion to 1,000 retail units by June and to a total of 1,500 units within 
three years," Michero told the group. Then he added, "Our research in- 
dicates that this country can hold 1,500 of our prototype stores." 

Of the 300 new stores scheduled for opening during the 1971 fiscal 
year, 200 would be company-owned, with the remainder associate 
stores, and one-half to two-thirds of the new outlets would be located in 
shopping centers, Michero said. "We prefer strip front centers," he dis- 
closed. "We like identification, and the merchants like us because we 
are not a parasite. We do not rely on walk-by traffic. Each one of our 
customers comes specifically to our store. In addition, shopping center 
sites are much more easily and quickly opened than lone-standing 
sites." 

All of the new stores, Michero emphasized, would be of the typical 
2,500-square foot Radio Shack variety, rather than the 10,000-square 
foot stores favored by Allied Radio. "We thought that we might do a 
few 'bull' stores in accordance with the Allied Radio prototype opera- 
tion," Michero said, "but as we measured more accurately the return of 
these stores we have not pursued them. Most of the former Allied stores 
are on short-term leases and they will not be reproduced." 

Of the Allied stores that Tandy acquired, Michero added, "The ideal 
arrangement for us would have been to purchase the stores without 
their inventory. The Allied concept was a supermarket that required a 
lot of footage and a lot of stock. The Radio Shack store requires less 
capital, is more efficient, easier to supervise and more profitable. We 
can build three Radio Shacks for one Allied." 

Looking back upon Michero's prediction that 1,500 stores was the 
maximum number of Radio Shacks the country could absorb, Herschel 
Wirm noted that this was a pretty bold forecast at the time. "But as we 
kept on growing, we kept on changing the numbers," he disclosed. 
"Each time someone set a number as to the optimum number of Radio 
Shack stores we could have, that number would be met and a new opti- 
mum number would then be handed down." 

* * * 

In the spring of 1971, Tandy stock was a hot item on the Big Board. 
Charles Tandy's personal holdings of some 240,000 shares had in- 
creased in value to some $12 million. Investors snapped up a public of- 
fering of 800,000 shares of Tandy stock at the 1970 year-end at $49.75 
per share. The company utilized the $37.9 million proceeds of the of- 



310 ZSA ZSA MISSES A RIBBON-CUTTING 

fering to pay off short-term bank loans that had funded the year's store 
expansion program. 

The January, 1971 issue of Fortune magazine named Tandy Corpora- 
tion the nation's No. 1 retail merchandiser and one of the 40 top corpo- 
rations in the country. 

Forbes magazine ranked Tandy fourth among the outstanding per- 
formers on the New York Exchange as a result of the whopping 555.7 
percent increase in the price of its stock over the 5-year period between 
1966 and 1970. Forbes also ranked Tandy first in 5-year sales growth 
and in 5-year earnings per share growth among the nation's top re- 
tailers. 

An article about Charles Tandy in Investor's Reader, published by 
Merrill Lynch, Pierce, Fenner & Smith, noted that "Texas millionaires 
traditionally think big, but big can be relative. Charles David Tandy, 
the 52-year-old chairman of Fort Worth-based Tandy Corp., says when 
he came to his father's wholesale leather business in 1947 after Texas 
Christian University, Harvard Business School and the U.S. Navy, his 
aim was 'to build a big company with sales of $1 million.' When he 
achieved that, he figured, 'If I could earn $1 million before taxes, I'd be 
doing good. My next goal was $100 million volume. Now it's a billion. 
I have learned to move the figures far enough away.'" 

Tandy Corporation was featured in a column in Barron 's by Alan 
Abelson, who recalled an earlier Barron 's story that described Tandy as 
a specialty retailer of leather handicraft and hobby items. 

"Well," Abelson now wrote, "Tandy has spread its wings and grown 
mightily since then. The company is now heavily in consumer electron- 
ics. Its progress has enjoyed considerable investment recognition. The 
stock, which could be had for 8 in 1967, has sold as high as 66V2. Last 
week, it traded around 48. At this level, it commanded a not inconsider- 
able PE (price earnings ratio) of 21. Bulls on Tandy look for another 
solid earnings gain in the current (1971) fiscal year." 

In an appearance before the Dallas Association of Investment Ana- 
lysts on January 20, 1971, Tandy noted that Tandy Corporation sales 
soared 60 percent over the past six-month period in the face of a gener- 
al falling off of retail sales nationally. "We don't expect a 60 percent 

gain in profitability, because of (the cost of our) new store openings," 
he told the group. "But from what I've seen of our earnings, I'm tickled 
to death." He then asked, "Why are we able to do better than retailing 

in general? The answer is that we are staying with smaller ticket items. 



ZSA ZSA MISSES A RIBBON-CUTTING 311 

For example, the average ticket item at Allied Radio Shack brings in 
$5.80." 

He also gave credit to the company's stepped-up advertising 
programs. 

"I wasn't impressed by our sales figures for the six days following 
Thanksgiving 1970," he informed the analysts. "So I released $750,000 
for the advertising budget and that brought sales up to expectations. At 
Tandy, we reserve a certain percentage of our sales which goes into ad- 
vertising. It is one of our musts, one of our biggest items and we be- 
lieve in it. We know if we don't do the advertising, we won't have our 
sales. We have learned without question that if you are going to main- 
tain your gains and if you are going to maintain the improvement in 
your sales, you've got to advertise. Just because you have sales running 
well, that is not the time to slow down." 

When he took over Radio Shack, Tandy told the analysts, "They 
thought a four or five percent advertising budget was a good one. Right 
now we are running close to a nine percent advertising budget as a per- 
cent of sales." 

In January, 1971, Tandy stock got another boost when the prestigious 
Putnam Vista Fund of Boston added it to its list of ten largest invest- 
ments. Tandy joined such select company as Xerox, IBM, Western 
Union, Philip Morris, and Burroughs in the Putnam Vista portfolio. 

One note of sadness, however, interrupted the flow of happy tidings. 
This was the untimely death of Bill Tandy at the age of 49 on February 
15, 1971, after a heart attack. Bill had become a successful business- 
man in Tulsa, and at the time of his death was president of the Southern 
Mill & Manufacturing Company there. He was survived by his wife, 
Mary Louise; a daughter, Carol, and a son, Alfred R. Tandy, Jr. Over 
the next few years, Charles Tandy devoted himself to keeping Bill's 
business moving for the benefit of his brother's wife and children. 

# # # 

In the spring of 1971, Tandy stock, along with the market in general, 
was benefitting from a pump-priming program that President Richard 
M. Nixon initiated in anticipation of the 1972 presidential election. 

This moved Humphrey B. Neill, publisher of a Washington newslet- 
ter, to pontificate: "So why shouldn't the stock market stampede when 
it becomes evident that a conservative Republican president is ready 
and willing to spend the country into prosperity? Alexander Hamilton 
did it, too. The contrary idea that Mr. Nixon would go to any lengths to 



312 ZSA ZSA MISSES A RIBBON-CUTTING 

prevent a depression is a notion hard to accept, but I believe it now is 
evident. A depression on top of a hated war could tear this nation to 
pieces." 

The "stampeding" stock market, to which Neill referred, helped pro- 
pel Tandy stock to a new high of 74 by late April. So when the Tandy 
Coiporation board convened on April 29 for its regular quarterly meet- 
ing in Fort Worth, one of the items on the agenda was a proposal from 
management for a two-for-one stock split. The split, subject to share- 
holder approval of an increase in the number of authorized shares of 
common stock from 10 million to 20 million, was okayed by the board. 
A special meeting of shareholders was called for June 18, 1971, to con- 
sider the increase in the number of shares. 

The board also approved a call for redemption of the entire $40 mil- 
lion issue of five percent subordinated debentures due in 1989. Deben- 
ture holders were given the choice of redeeming the debentures for cash 
at 104.75 percent of their face value or of converting them into Tandy 
common stock at a price of $62 per share. 

On June 18, shareholders overwhelmingly approved the increase in 
the number of authorized shares, paving the way for the two-for-one 
stock split which became effective on July 28, 1971. 

The call for redemption of the debentures resulted in the conversion 
of $39,890,000 of the $40 million face amount into 642,728 shares of 
Tandy common stock, with only $110,000 in debentures being re- 
deemed for cash on June 15, 1971. 

As far as Tandy investors were concerned, it was obvious that as long 
as the stock continued its bullish course, redemption could wait. 

As for Charles Tandy, it was like getting a second dessert. He was 
getting his cake and eating it, too. 

He also was reveling in his new status as an honorary Doctor of Laws 
bestowed upon him by his alma mater, TCU, in the spring of 1971. 
"Not bad for a guy who once flunked out of Rice," he chortled after the 
ceremony at the commencement exercises. 

At a gathering of students in the M. J. Neeley School of Business at 
TCU, Tandy gave the group a sampling of his business philosophy. 

"The customer is our boss," he declared. u He is trying to tell us 
something, so we can't argue. We want to know exactly what will 
make him happy, and we ask him just that. Usually, when a man com- 
plains to the president of a company, something definitely is wrong 



ZSA ZSA MISSES A RIBBON-CUTTING 313 

somewhere. But this type of complainant usually becomes our best cus- 
tomer and biggest booster." 

Then he added, "At Tandy, we welcome young people with all 
their ideas, because a company that will not accept change will not 
succeed." 

* * * 

One thing that was not about to change, however, was Tandy's appe- 
tite for acquisitions. It manifested itself once again on July 1, 1971, 
with the purchase for $3.7 million in cash and stock of PJ. Parker, Inc., 
of Rochester, New York, whose principal asset was Hickok Manufac- 
turing Company, producer and marketer of a nationally-known brand of 
belts, billfolds, men's jewelry and other accessories. Hickok had report- 
ed a net loss of $500,000 on sales of $18 million for the year ended De- 
cember 31, 1970, but Lewis D. Shows, the Tandy Corporation vice 
president who represented the company in the negotiations, was confi- 
dent he could turn the operation around with an infusion of cash and 
marketing savvy. 

"The acquisition will provide Hickok with the capital requirements to 
support expanded merchandising programs required in the rapidly- 
growing men's fashion market," Shows said in a press release announc- 
ing the purchase. 

Shows also announced that the Hickok offices and its key executives, 
including its president, William Wright, would move to Arlington, Tex- 
as, between Fort Worth and Dallas, before the end of the year and that 
the Hickok leather goods operations would relocate from Rochester to 
Arlington by July 1972. 

One of the things that Tandy inherited in the Hickok acquisition was 
the Hickok Belt Award for the outstanding professional athlete of the 
year. The annual award, a $30,000 diamond-studded belt, was started in 
1950 by Raymond T. Hickok to honor the year's outstanding profes- 
sional boxer. Hickok, an avid boxing fan, reportedly began the award 
named in honor of his father, S. Rae Hickok, as a means of meeting his 
ring idols in the flesh. But over the years, the scope of the award en- 
larged to include all professional sports. 

Despite the fact that Charles Tandy was totally disinterested in sports, 
professional or otherwise, he permitted himself to be talked into pre- 
senting the Hickok Award to golfer Lee Trevino at a dinner at the Holi- 
day Inn Downtown in Rochester on January 31, 1972. Trevino, who 



314 ZSA ZSA MISSES A RIB BON -CUTTING 

had won the United States, British, and Canadian Opens in 1971, was 
the first professional golfer to receive the award, winning out over a 
field that included basketball player Kareem Abdul-Jabbar, heavy- 
weight boxing champion Joe Frazier, and baseball Hall of Famer Rob- 
erto Clemente. 

Despite the auspicious start, the Hickok Award failed to survive the 
change in ownership. The members of the Rochester Press and Radio 
Club, under whose aegis the Hickok Belt had been presented over the 
years, voted to drop their backing of the event after the Trevino presen- 
tation. "After that," said Phil North, who had accompanied Tandy to 
Rochester for the award presentation, "we let the thing die a natural 
death." 

There was another unforeseen fallout from the Hickok acquisition. 
Unbeknownst to Tandy management, the Hickok retirement benefits, 
including group insurance programs for retirees, were insufficiently 
funded. When this fact was discovered shortly after the takeover, Tandy 
cancelled the programs. But the funds that were already in the pension 
fund were not affected. Herschel Winn described what happened. 

"We didn't think we should have to pay out of our pockets what 
Hickok had promised to pay its retired employees. But Hickok had not 
funded the promises. So we terminated the plan. This meant that if I 
was getting a pension of $100 a month, I now would get $88 a month. 
So they sued us for the unfunded portion of the plan." 

By an unfortunate coincidence, from Tandy's standpoint at least, 
Senator Jacob K. Javitz of New York was leading an effort to impose 
federal vesting and funding requirements on new and existing pension 
and profit-sharing plans. In a speech on the Senate floor that got wide- 
spread media coverage, Javitz used the discontinuance of the Hickok 
pension plan as an example of the abuses he wanted to correct. The ac- 
tion by Tandy, Javitz maintained, meant that 350 retired Hickok work- 
ers would take a 12 percent cut in their pensions and 400 Hickok 
employees with rights to Hickok pensions would receive nothing at all. 
Javitz noted that Tandy was doing better financially in the current year 
than it had done the year before, so that its decision to phase out the 
Hickok tensions was not based on an v lack of earnings. 

An editorial in the Rochester Democrat and Chronicle declared, "Be- 
cause of tottering or bankrupt pension plans, 36 million workers out of 
40 million promised pensions are doomed to little or nothing according 



ZSA ZSA MISSES A RIBBON-CUTTING 315 

to some estimates. It isn't necessary to look any further than Rochester 
to find an example. When the parent Tandy Corp. of Fort Worth took 
over the Hickok operation here, it assumed its liabilities and obliga- 
tions. One of those obligations was to continue to fund the pension 
plan. The employees have been badly let down." 

Tandy's position was that the contract did not require such an 
obligation. 

The suit was eventually settled after Hickok was spun off and became 
a part of Tandy Brands in 1975. 

Although Charles Tandy was not directly involved in the Hickok 
matter, his lack of enthusiasm for employee benefit plans other than 
stock-buying programs was well known within the company. 

"He was never a big believer in those sort of things," recalled John 
McDaniel, who helped institute Radio Shack's first comprehensive 
group health insurance program in 1967. McDaniel, who later became a 
Tandy Corporation senior vice president and controller, added: 

"Charles believed in the company stock and he wanted everybody to 
buy it. He wanted everybody to be in the savings plan and later the 
stock purchase plan. But other benefits, such as hospitalization insur- 
ance, he didn't really believe in. We'd tell him we had to have hospital- 
ization in order to attract good employees, but Charles insisted it wasn't 
necessary in Radio Shack." 

McDaniel said that he and Bill Nugent, who was then a Radio Shack 
division manager, finally took matters in their own hands and signed a 
group health insurance contract with Aetna. 

"We didn't have Charles' approval to do that and we knew that he 
would find out about it," McDaniel said. "But he never said a word to 
us after he found out." 

Later, however, Tandy went to great lengths to needle McDaniel and 
Nugent about the plan's provisions, especially the $100 deductible. "A 
hundred bucks is reasonable for lower paid employees," he told them, 
"but executive types like you should have $1,000 deductibles." 

Bill Brooks, who was the Aetna division manager in Fort Worth at 
the time the contract was signed, recalled that Tandy Corporation had 
an "employee pay all" group health insurance plan with Prudential in 
the early 1960s, but that it was limited to top executives. 

"Several years later," he said, "Billy Roland extended the plan some- 
what, with Aetna as the carrier." Brooks told of the trepidation he expe- 



316 ZSA ZSA MISSES A RIBBON-CUTTING 

rienced when McDaniel and Nugent installed the comprehensive group 
insurance plan in 1967. "I was afraid I'd lose all of my Tandy business 
when Charles found out about it. But he never said a word to me." 

Jim Buxton had a more painful memory of the lack of an employee 
group insurance program in the early 1960s. 

"I had attempted without success to interest the company in putting in 
a group insurance plan," he recalled. "Then, I guess, it was around Eas- 
ter of 1961, when I was a Tandy Leather district manager and manag- 
ing a Tandy Leather and American Handicrafts store in San Antonio, 
one of my sons had an accident while mowing a neighbor's lawn. The 
mower mowed some of his toes off and he was in the hospital for three 
months. I went broke over that, not having any insurance, but I raised 
so much heck that they finally put in an insurance program a few years 
later. Lxither Henderson brought the policy to me and threw it down on 
my desk." This was the "employee pay all" group insurance plan with 
Prudential that was limited to top executives. 

Buxton's two sons, Tom and Dick, who began their careers sweeping 
out their father's leather store in San Antonio, followed in his footsteps 
as Radio Shack employees, Tom as a vice president in real estate and 
store planning and Dick as a group manager in international fran- 
chising. 

# # * 

Fiscal 1971 proved to be another year of growth for Tandy. Each of 
its four major marketing groups registered significant increases in sales 
over the prior year. 

Consumer Electronics led the way with a 56 percent increase, fol- 
lowed by Hobby and Handicrafts, up 36 percent; Manufacturing and 
Distribution, up 35 percent; and General Retailing, up 20 percent. Com- 
bined sales rose 41 percent to $356.9 million, while net income in- 
creased 24 percent to $11.3 million, or $1.25 per share. 

The Consumer Electronics Group, with sales of $161.6 million and 
earnings of $15.7 million before taxes, extraordinary items, interest 
charges and administrative expenses, provided 45 percent of Tandy's 
total sales and 60 percent of its earnings. 

In announcing the fiscal 1 97 1 results, Charles Tandy took special 
note of the "strong performance" of the Allied Radio Shack Division, 
calling its contributions to earnings "particularly gratifying in the light 
of the vigorous expansion program which continued throughout the 
year." 



ZSA ZSA MISSES A RIBBON-CUTTING 317 

The Allied Radio Shack expansion program added 219 company- 
owned retail outlets and 81 associate stores during the year, bringing 
the number of company-owned stores to 893 in 48 states and Canada, 
and the associate store total to 180. The grand total, as of June 30, 
1971, now stood at 1,073. 

Overall, Tandy Corporation ended fiscal 1971 with 1,451 company- 
owned and associate stores. 

The Hobby and Handicrafts Marketing Group, which included Tandy 
Leather, American Handicrafts, Wolfe Nurseries, Merribee and Color 
Tile, grew from 282 units to 400 during the year. 

The General Retailing Group, which included Leonards, Meacham's 
and Mitchell ' s, opened 23 new outlets, including two full-line 
Leonards suburban department stores and 15 Mitchell's junior depart- 
ment stores, bringing the number of outlets in the group to 58. But the 
General Retailing Group continued to remain unprofitable, posting a 
loss of $2.3 million. 

Tandy took note of the loss in the 1971 Annual Report. 

"The General Retailing earnings performance reflects the burden of 
the very vigorous suburban store expansion program pursued during the 
past two years," he commented. "The Company generated greatly in- 
creased overheads in connection with these moves into new trade areas, 
and sales levels were not yet developed commensurate with the in- 
creased expenses. The suburban expansion program was undertaken in 
the knowledge that it would have a negative effect on earnings until 
sales of the new retail outlets reach the projected levels." 

Tandy was a bit more bullish about the outlook for the Consumer 
Electronics Group. 

"The past three decades have witnessed an unprecedented growth in 
the use and popularity of consumer electronic products," he noted. "The 
development of efficient sound recording and reproduction systems, 
household electronic devices and the profusion of parts and equipment 
to service and improve their performance has created an industry and 
a burgeoning market which barely existed thirty years ago. Our Con- 
sumer Electronics marketing group serves this growing segment of the 
economy through our Allied Radio Shack Division. Our program in- 
volves designing and selecting products which bring the latest techno- 
logical advances and the greatest possible value to our customers. By 
continuing to utilize marketing techniques which offer the utmost in 
service and individual attention to each customer, we are confident we 



318 ZSA ZSA MISSES A RIBBON-CUTTING 

will continue the pattern of impressive gains shown by our Consumer 
Electronics Group during 1971." 

As 1971 drew to a close, there remained one event that would pro- 
vide the icing on the cake to what had been an especially rewarding 
year for Charles Tandy. Perry R. Bass, the patriarch of the billionaire 
Bass family of Fort Worth, was elected to the Tandy Corporation 
board. Bass, the nephew of the legendary Fort Worth wildcatter, Sid W. 
Richardson, was a leading independent oil operator and successful in- 
vestor in his own right, a renowned yachtsman who served as Ted 
Turner's navigator in international yachting competition, and a philan- 
thropist noted for his support of education and the arts. 

Bass was not only one of the nation's wealthiest men, but he and his 
wife, Nancy Lee, sat at the apogee of Fort Worth society. Two of their 
four sons, Sid R. Bass and Robert M. Bass, were already beginning to 
carve out identities of their own as savvy investors, whose individual 
fortunes would one day exceed $1 billion. The Bass' two younger sons, 
Lee and Ed, though lesser known outside of Fort Worth, would become 
involved in a variety of business undertakings and Ed Bass would gain 
widespread recognition as a result of his sponsorship and funding of a 
biosphere project in Arizona in 1991. 

When Charles Tandy approached him about joining the Tandy Cor- 
poration board, Perry Bass at first demurred. "I told him that I was in 
the process of getting off boards rather then joining them," Bass re- 
called. "But then Anne called me and said she wanted me on the board 
so that she would have someone on the inside that she could turn to in 
the event that something happened to Charles." 

Having Perry Bass accept the invitation to join his board provided 
Charles Tandy with the ultimate gratification of his ego. It gave him a 
special status in his home town that had somehow eluded him. The am- 
bitious young man who once had vowed that one day he would turn his 
father's leather business into something really big had finally arrived. 

He had come a long way from 15th and Throckmorton. 



Chapter 21 
Disaster in a Rice Field 



It was chilly outside, with the wind whistling in from the north, but 
inside the Tandy hangar at Meacham Field in Fort Worth on Monday 
morning, January 18, 1972, things were warm and cozy and the coffee 
in the percolator was piping hot. The seven passengers who would be 
flying to Victoria, Texas, that morning aboard a Gates Learjet owned 
and operated by Tandy Corporation were enjoying a final cup before 
boarding the aircraft in anticipation of the scheduled 7 a.m. departure. 
They began gathering shortly after 6:30 a.m., but the crew arrived well 
before 6 o'clock to conduct their pre-flight checks and file their flight 
plan. 

At 6:04 a.m., Glenn Alvin Clifton, chief pilot of Tandy Corporation, 
received a weather briefing from the Fort Worth Flight Service Station 
that indicated considerable cloudiness along the route to Victoria. The 
report gave the prevailing visibility there as five miles, and forecast it 
would decrease to no less than three miles. This was well above the 
minimum requirements of a 400-foot ceiling and one-mile visibility for 
an authorized landing of a Learjet at the Victoria airport. 

Clifton filed an Instrument Flight Rules (IFR) flight plan to the Vic- 
toria County-Foster Airport, estimating a flight time of 45 minutes and 
specifying three hours of fuel on board the aircraft. The designated al- 
ternate airport was Austin, Texas. 

At 6:45 a.m., the seven passengers began boarding the Learjet and 
buckled themselves in. Promptly at 7 a.m. Clifton taxied out of the han- 
gar. At 7:04 a.m., the plane was airborne. 

Clifton, 52, a World War II Army Air Corps pilot, had been a pilot 
for Tandy Industries, a company owned by Bill Tandy in Tulsa, for 
nine years before becoming chief pilot of Tandy Corporation in April 
of 197 L He qualified on Learjets while in the employ of Tandy Indus- 

319 



320 DISASTER IN A RICE FIELD 

tries. He had a total of more than 15,500 hours of pilot flying time to 
his credit. 

Clifton's co-pilot was Cecil Swanner Gibson, 29, who also had flown 
for Tandy Industries in Tulsa before joining Tandy Corporation in No- 
vember 1971. Gibson had more than 2,100 hours of flight time in his 
pilot's log. 

The seven passengers aboard the $1.5 million jet, a 1970 Model 25, 
that brisk January morning were Lewis D. Shows, a Tandy Corporation 
vice president, and his wife, Jane; William H. Wright, president of 
Hickok Manufacturing, Inc., and his wife, Barbara Jane; and three other 
Hickok executives, Harry McLean, merchandise manager; Richard 
J. Braun, production manager; and James W. Toombs, purchasing 
manager. 

Shows and the four Hickok representatives were scheduled to attend 
a meeting with Tex Tan Welhausen executives in Yoakum, Texas, at 10 
o'clock that morning. They were to be met at the Victoria County- 
Foster Airport in Victoria and driven the 40 miles north to Yoakum, 
where the Tex Tan Welhausen headquarters were located. Clifton had 
decided not to land at the Yoakum airport because its runway was not 
long enough to accommodate a jet. Victoria, on the other hand, had an 
11,000-foot runway. 

Mrs. Shows was making the flight because she was planning to visit 
her husband's ill mother at her home in Beeville, 35 miles southeast of 
Victoria. Mrs. Wright was planning to visit friends in Yoakum, where 
she and her husband had lived briefly while he was a Tex Tan Wel- 
hausen vice president. 

Shows, 52, was a rising star in the Tandy corporate hierarchy. He had 
joined Tex Tan Welhausen in Yoakum in 1946 after service as a cap- 
tain in the Army Air Corps during World War II, had become a sales 
manager in 1959 and been promoted to president in 1961. He moved 
from Yoakum to Fort Worth in July 1970 after being named a vice 
president of Tandy Corporation. His responsibilities at the corporate 
level included overseeing the Manufacturing and Distribution Group 
that included Tex Tan Welhausen, Tex Tan Western Leather Company 
and Hickok. Shows had nla^ed a ma* or role in the negotiations for the 
Hickok acquisition in July 1971. 

Wright, 55, moved to Rochester from Yoakum after taking over the 
Hickok presidency in September 1971, but his stay in upstate New 
York was short-lived. He returned to Texas in December 1971, when 



DISASTER IN A RICE FIELD 321 

the Hickok executive offices were transferred to Arlington. Wright 
joined Tex Tan Welhausen in 1959 as a sales representative in San 
Francisco and was promoted to Western regional manager in 1966. He 
was vice president of sales and merchandising of Tex Tan Welhausen 
in Yoakum when he was tapped by Shows to become president of 
Hickok. 

McLean, Braun, and Toombs were among the 30 Hickok executives 
who made the move from Rochester to Arlington after Hickok' s sale to 
Tandy Corporation. 

After takeoff, Clifton turned the plane's nose in a southeasterly head- 
ing and began his ascent to the 29,000-foot altitude for which he had 
been cleared by the Fort Worth Air Route Traffic Control Center. The 
next 28 minutes were uneventful as the graceful jet homed in on its 
destination. 

At 7:32 a.m., Clifton contacted the Houston Air Route Traffic Con- 
trol Center to receive clearance to begin his descent into Victoria. He 
was cleared to 24,000 feet. Three minutes later, he was cleared to 
10,000 feet and was given the current Victoria altimeter setting of 30.03 
inches of mercury. Houston provided the Victoria altimeter setting be- 
cause the Victoria control tower had been closed due to a lack of traf- 
fic. At 7:39 a. m., Clifton reported he had just passed through 15,500 
feet and was granted clearance to descend to 5,000 feet. 

At 7:40, Houston Traffic Control transmitted a special weather obser- 
vation for the Victoria airport: "Sky partially obscured, 2,000 scattered, 
estimated 8,000 broken, one-quarter of a mile visibility with fog, wind 
calm." 

Clifton responded to the message that visibility at Victoria had 
dropped below the one-mile minimum level: "Tango Charlie, Roger, 
we'll go take a look at it... stay with you...." 

At 7:41:10, Clifton reported he was at 9,000 feet and descending. At 
7:41:40, he reported he had just passed through 8,000 feet. He was then 
cleared by Houston Control for the approach to the Victoria airport. 

At 7:44, Houston Traffic Control queried Clifton about the weather 
conditions he was encountering. 

He answered, "Tango Charlie, we can't tell. We're still at 3,000 
feet." 

Houston radioed, "Radar contact is lost five miles northwest of Vic- 
toria. What is your present altitude?" 

Clifton replied, "Three thousand, Tango Charlie." 



322 DISASTER IN A RICE FIELD 

That was the final radio transmission. 

Raymond Krawietz, owner of a farm northeast of the Victoria airport 
and close to the airport's approach-zone area, was in the kitchen with 
his wife when he heard the sound of an airplane overhead. 

"It was coming in real low and it sounded like it was going to take 
the roof off the house," Krawietz later reported. A few seconds later, he 
heard a loud noise that shook the farmhouse "like there had been an 
earthquake." An electric clock in the kitchen stopped at 7:45 a.m. as the 
house began to shake. 

Krawietz's wife said, "That plane just crashed/' 

Krawietz went outside but couldn't see anything because of the dense 
fog that enveloped the area. He told a National Transportation Safety 
Board investigator that the fog was so thick he could barely see 100 feet 
in front of him. But that did not deter him from climbing into his pick- 
up truck and driving to the fence line on his property. He could see 
parts of the wreckage of an airplane and "little fires burning about ev- 
ery 30 feet or so." He also saw an electric utility pole that had been 
knocked down. 

"I came right back and called the Department of Public Safety, then 
went back and followed the crash path," Krawietz later related to Star- 
Telegram reporter Jim Marrs. "It looked like the plane hit the ground 
first and came back up. The left wing hit the power pole and it went 
right on through my fence and ended up in this other rice field. I fol- 
lowed the crash path and found the bodies. It looked like there were 
nine." 

The twin-engined jet first struck the ground about 10 yards inside of 
Krawietz's property line, leaving a hole about two-feet deep. It then 
smashed through a fence, sheared off a power line pole and disintegrat- 
ed as it plunged through a plowed rice field belonging to a fanner 
named Roy Scherer. The two largest remaining parts of the plane, 
which caromed more than 400 yards through the rice field, were an 
eight-foot section of the cockpit and a slightly smaller piece of the tail 
structure. 

The site of the crash was exactly 1.7 nautical miles short of the air- 

tnnrt mnwav tVip N^tinn^l TVs nsnnrta firm Safetv Board stated in its offi- 
r w At . A ,~^ — J 9 *-*_ .^ , — ~^ r J - 

cial report on the accident. 
There were no survivors. 



DISASTER rN A RICE FIELD 323 

The Shows left three children, two married daughters and a son. The 
Wrights were the parents of twin sons. McLean, 40, was survived by a 
wife and four children, ages 4 to 11; Toombs, 52, by a wife and a 
daughter; and Braun, 34, by his wife and three small children. Clifton 
was survived by his wife, a son and a daughter. Gibson was unmarried. 

The news of the crash stunned everyone in Tandy headquarters in 
Fort Worth. Bettye Elliston, who was then Jim West's secretary, 
recalled how the switchboard lit up with calls after the first reports 
were aired that a plane carrying a group of Tandy executives had gone 
down. Ms. Elliston, who joined Tandy in 1968 and become Bernie Ap» 
pel's secretary after Jim West's retirement, said that many callers were 
concerned stockholders seeking details of the accident. Other callers 
were newspapers, radio and ...television stations and news services from 
across the country seeking further information and the names of the 
victims. 

"Janet Lesok, Charles Tandy's secretary, and I were sitting together 
when the phones started ringing off the walls," Ms. Elliston said. "All 
of the officers up on the second floor came out of their offices and 
stood behind us offering their moral support, as we tried to answer all 
of the calls." 

Tandy, who usually arrived late in the morning, had not yet arrived. 
When notified, he took the news so hard that his cardiologist, Dr. Bob- 
by Brown, was called and looked in on him later that morning at 
Tandy's apartment on Curzon. 

When the news of the crash hit Wall Street, Tandy stock sold off 
sharply on rumors that Charles Tandy had been killed. The stock 
dropped 214 points, from 41 54 to 39, in a matter of minutes, but recov- 
ered somewhat after the announcement was made that Tandy had not 
been aboard the aircraft. The stock closed at $40, down $1.50 on the 
day. 

By 10 a.m., Bill Michero was aboard a jet belonging to Anne Tandy's 
Four Sixes Ranch bound for Victoria to handle arrangements for the 
shipment of the bodies to funeral homes in the cities where the funeral 
services were to be held and to take charge of personal effects found in 
the wreckage. The men were quickly identified by wallets and other 
documents found on the bodies. Mrs. Shows' body was identified 
through a 2V% carat diamond ring found on her finger. The identification 



324 DISASTER IN A RICE FIELD 

was made by a Victoria physician, Dr. Charles Borchers, the son-in-law 
of Carl C. Welhausen of Yoakum, a Tandy Corporation vice president 
and director and a former president of Tex Tan Welhausen. 

A bizarre sidelight to the disaster was later recalled by John Roach, 
who had invited a group of friends to his home the night before the 
crash to attend a birthday dinner party for his wife, Jean. 

"Everyone at the party knew that I was supposed to leave on a trip 
the next morning," Roach related. "When the news broke that a Tandy 
plane had crashed, they all assumed I was aboard." 

Roach did fly to Baltimore on the morning of January 18 on a com- 
mercial airline flight. Upon his arrival at the airport, he rented a car. 

"I found out about the crash when I turned on the car radio," he said. 

On August 9, 1972, the National Transportation Safety Board issued 
a report attributing the "probable cause" of the accident to the "lack of 
altitude awareness on the part of the flight crew while descending into 
known weather conditions which were conducive to a rapid deteriora- 
tion in forward visibility. The action of the crew," the report continued, 
"might have been influenced by a visual, illusory effect produced by a 
shallow layer of dense fog, combined with the relative position of the 

sun." 

The Safety Board recommended that the Federal Aviation Adminis- 
tration ensure the widespread dissemination of Advisory Circulars and 
Air Carrier Operations Bulletins which emphasized the hazards associ- 
ated with weather conditions characterized by a "partial obscuration 
caused by shallow dense fog." 

The report noted, "If the preflight forecast had indicated that the 
visibility at Victoria was expected to drop to between one-quarter and 
one-eighth mile in fog by arrival time, it is conceivable that the pilot 
might not have initiated the flight, or might have planned his flight to 
the alternate destination. Regardless of the forecast, however, the pilot 
was informed that the visibility had dropped to one-quarter mile in fog 
prior to initiation of the approach. The Board believes that the pilot 
used poor judgment in attempting the approach under the weather con- 
ditions which prevailed." 

On January 27 , 1972, Charles Tandy announced the election of John 
Cosby as a vice president of Tandy Corporation and president of Hick- 
ok Manufacturing Company. Cosby had succeeded Lewis Shows as 



DISASTER IN A RICE FIELD 325 

president of Tex Tan Welhausen in 1970 when Shows moved to Fort 
Worth to become a Tandy Corporation vice president. Cosby began his 
career with Tex Tan in 1948 as a sales representative in the Pacific 
Northwest after serving four years in the U.S. Army during World 
War II. 

At the same time, Arthur A. Tolbert, a longtime employee who had 
joined the company as a factory worker in 1933, was elected president 
of Tex Tan Welhausen Company, succeeding Cosby. 

The vacancies caused by the plane crash in Victoria were filled from 
within. But for top management, it was a sobering reminder of the im- 
portance of maintaining a strong cadre of support strength on the corpo- 
rate ladder. 



Out in the field, however, it was business as usual. And in the execu- 
tive suite in Fort Worth, Tandy was still wheeling and dealing. 

On February 5, 1972, he announced the acquisition of Vit-A-Way 
Corporation, a 30-year-old Fort Worth manufacturer and distributor of 
mineral and vitamin feed supplements for the livestock industry, with 
plants in Denison, Texas, and Albuquerque, New Mexico. 

Tandy called the $750,000 cash acquisition "another expansion of our 
agribusiness," which now included Tex Tan Western Leather Company, 
Bona Allen, Inc., and the J.M. Bucheimer Company. 

Leo Potishman, a former grain dealer who had founded Vit-A-Way 
in 1942, said he had had prior offers to sell the company but had waited 
until an organization came along that had the resources to expand the 
manufacturing and marketing of the products. 

"Money doesn't mean as much to me as will the satisfaction of 
watching something I founded and built continue to grow," Potishman 
told James E. Vance, a Star-Telegram agricultural writer. 

Vit-A-Way, however, did not fit into the Tandy picture as Charles 
had hoped. Its sales never exceeded $3 million, and it was sold to the 
SuCrest Corporation on February 26, 1975. 

On May 4, 1972, Tandy announced another deal that appeared to 
some observors to make even less sense than the Vit-A-Way acquisi- 
tion. This was the purchase of 14.26 percent of the outstanding stock of 
Kimbell, Inc., a Fort Worth-based holding company, for $8.5 million in 
cash and notes. Kimbell owned and operated a chain of Buddie's Su- 



326 DISASTER IN A RICE FIELD 

perxnarkets, and a number of Thrifty Drug Stores and Jetton's Cafeteri- 
as in the Fort Worth area. The stock was purchased from J.C. Pace, Jr., 
who was then the president of Buddie's Supermarkets and a Kimbell 
director. 

Tandy called the purchase of the Kimbell stock an investment in its 
growing merchandising operations, an optimism which some members 
of the financial community and at least one of his directors failed to 
share. Phil North said he tried to discourage Tandy from making the 
deal, basing his argument on the fact that the gross margins of grocery 
chains were very low in comparison to the numbers to which Tandy 
was accustomed. 

"We'd have been better off buying our own stock," North said, "but 
Charles was hot to do this, and the board went along with him. This 
was typical of the board's reaction to everything he presented. For the 
most part, the attitude was that Charles knew what was best for the 
company, and most of the time he did. Sure, he'd made an occasional 
mistake, but when you were doing as many things as he was, there had 
to be an occasional loser." 

Bill Michero was having a hamburger with a New York securities an- 
alyst, Robert J. Schweich of Wertheim & Co., when the news of the 
purchase of the Kimbell stock broke. 

"The guy just went berserk," Michero said with a chuckle. "He just 
went ape. He'd been touting Tandy stock. Now he could hardly wait to 
get to a telephone to tell his office to dump the stock." 

Why did Tandy buy the Kimbell stock, which it sold back to Kim- 
bell, Inc., in December 1977 for $8.5 million in cash, the same price it 
paid for the stock five and-a-half years earlier? 

It was reported that he had entertained the possibility of putting 
Radio Shack departments into the Buddie's supermarkets, but it was an 
idea that never came to fruition. 

Bill Michero contended that the purchase was "more of a social deci- 
sion than a business decision." 

Some of Fort Worth's wealthiest families were represented on the 
board of the Kimbell Art Foundation, the beneficial owner of the ma- 
^orit Tr of the Kimbell stock. The foundation built the world-renowned 
Kimbell Art Museum in Fort Worth. The museum was named for Kay 
Kimbell, the founder of Kimbell, Inc., who left his entire estate and ex- 
tensive art collection to the foundation upon his death in 1964 and di- 



DISASTER IN A RICE FIELD 327 

rected the foundation trustees to build a museum of the "highest 
quality" for the benefit of the people of Fort Worth. The trustees select- 
ed Louis Kahn, the noted Philadelphia architect, to design the interna- 
tionally-acclaimed museum building. 

Charles and Anne Tandy were among the guests from the cream of 
Fort Worth society and art patrons and critics from across the nation 
and abroad at the black tie gala that highlighted the festivities surround- 
ing the opening of the Kimbell Art Museum on October 4, 1972. One 
of the local guests remembered chatting with Hilton Kramer, then the 
art editor of the New York Times, at the opening night party, 

"Kramer just couldn't get over the fact that this jewel of a museum 
could be built in Fort Worth, Texas," the Fort Worth resident recalled. 
"He was awed by the collection of art that had already been assembled 
and by the money that was available to add additional works from 
around the world." 

* # # 

Charles Tandy for vice president? 

Someone had to be joking. But there it was, an article in the Audio 
Times, that speculated on that possibility. The fact that the date the arti- 
cle appeared was April 1, 1972, was considered by some to be highly 
appropriate. The headline over the story declared: "Industry Figures 
Enter Politics." Under a Washington, D.C. dateline, the article began: 

"President Richard Nixon is known to be contemplating Charles 
Tandy as his running mate in the next presidential election to replace 
Spiro Agnew. 

"'It makes sense/ said a presidential spokesman. 'Tandy has 1,500 
Radio Shack stores alone — and lord knows how many Tandy Craft 
Centers. Just the exposure in their windows alone would be enough to 
cinch the election.' 

"Meanwhile, informed Democratic sources say IHF prexy Walter 
Goodman is considering entering the next primary in a bid for the U.S. 
presidency. 

"'It's probably an easier job than running the Institute of High 
Fidelity,' Goodman told Audio Times. The IHF president said he was 
certain he could do a better job than the present administration. 'Of 
course, I'd hate running against Charles Tandy. He's my friend.'" 

Charles Tandy never expressed a great interest in partisan politics, al- 
though he was a conservative on fiscal issues and on government inter- 



328 DISASTER IN A RICE FIELD 

ference with the free enterprise system. He never minced any words 
when expressing his opinion about politicians. His favorite target was 
Congress. 

"Congress is not responding to what we, as the core of the American 
people, want," he told an interviewer, Tina Flori, who was writing an 
article about him for the TCU student magazine. "Congress does it all 
in the guise of 'That's what the people want.' But the people don't 
know the price they're going to pay for it. The public isn't informed, 
they're lied to. Government officials say they're not going to tax the 
people, they're going to tax business. Well, the only thing business can 
do is put it back in the price of the product. Hell, there ain't no such 
thing as a free ride. 

"They've lied like hell about Social Security. That thing is bankrupt. 
If that was me handling the Social Security program, I'd be in jail. It'd 
make Billie Sol Estes look like Jesus Christ. I've had a Social Security 
card since June 2, 1937, and they've spent all the money I've sent 
them. They don't understand sound fiscal policy Give me twice as 
many salesmen and we'll make this government economy spin like 
you've never seen it spin. 

"But politicans think, 'No, don't excite the public. We might not get 
elected next year.' Hell, you can't get elected unless you lie to every- 
body. The best thing that John Connally ever said was to limit the terms 
of Congressmen and the President. Get them out of there and make 
them live with the laws they've passed." 

Nevertheless, when it served his purposes, Tandy was not averse 
to seeking the aid of his Congressman. Former Speaker of the House 
Jim Wright of Fort Worth recalled an incident that took place back in 
the 1950s shortly after he had been elected to his first term in the 
House. 

"Charles was incensed over a surtax that had been imposed on certain 
types of leather goods," Wright recounted. "He called me about setting 
up a meeting with the appropriate bureaucrat in Washington so that he 
could present his side of the issue. I made the arrangements. I'll never 
forget the day of the meeting. Charles barged into the bureaucrats' of- 

&„*» o^>^^r^rr o Vmt^t* p.H„*>/-mrtH hiH^ on hie; shrmlHer ?mri threw it down 

JLJLW UUllJillg, 14. IltUlUlVU jJVVWAV* iiJL^W W!A ***^. ^~~~ *.,,,- 

on his desk. Now that he had gotten the guy's attention, he proceeded 
to tell him what he thought about the surtax. Obviously, he knew how 
to add weight to his argument." 

* # * 



DISASTER IN A RICE FIELD 329 

Tandy Corporation closed out the 1972 fiscal year on June 30 with 
net earnings of $1.41 per share on sales of $423.2 million. While net 
earnings had risen 39 percent, net income per share had grown only 13 
percent. The per-share earnings had been dampened by a 23 percent in- 
crease in shares outstanding as a result of the acquisitions. 

Nevertheless, Charles Tandy, commenting on the year in his letter to 
shareholders in the Annual Report, called it "the most productive" in 
the company's history and the tenth consecutive year of "unbroken ad- 
vances." The company, he said, had successfully dealt with problems 
posed by the temporary closing of domestic ports, the revaluation of 
foreign currencies and the wage-price freeze that had been imposed 
during the year. "The orderly marketing processes of several divisions 
were strained at various times," Tandy wrote, "but the impact of the 
new economic conditions had been largely assimilated as the year drew 
to a close." 

As of June 30, 1972, Tandy reported, the company was operating 
1,943 retail stores, a net increase of 592 units over the past 12 months. 
He called the opening of "almost two stores for each business day of 
the year, a record for the company, and possibly a record for any mer- 
chandising organization." 

Of the 592 new retail outlets opened, 435 were in the Consumer Elec- 
tronics Group, which again led all other groups in sales and profitabili- 
ty, accounting for 43 percent of sales and 64 percent of earnings. The 
new units brought the number of company-owned stores in the Radio 
Shack Division to 1,328 in the 48 continental states, the District of Co- 
lumbia and Canada. Not included in the total were 215 associate stores 
and the 37 Allied Radio stores destined for divestiture. 

Phil North, however, had another memory of 1972, one not nearly as 
sanguine as Tandy's. 

During the summer of 1972," he recalled, "we were opening two 
Radio Shack stores a day and were ordering merchandise to stock the 
stores. Suddenly, we found we were literally out of money. The loan 
limits of the Fort Worth banks were not anywhere close to what we 
needed. We called the Republic National Bank of Dallas and they told 
us they'd loan us $10 million if we'd put two of their people on our 
board and promise not to open any more stores. Charles told them that 
was not an acceptable solution to the problem. 

"So he and I went to Chicago to talk to the banks up there. When we 
called Continental Illinois, they told us not to even bother coming to 



330 DISASTER IN A RICE FIELD 

see them. They weren't interested in lending us any money. The First of 
Chicago invited us to come over, but they spent the entire time talking 
about how much bad paper they had from other companies and why 
they weren't making corporate loans. 

"Charles and I went outside. We had our coats slung over our shoul- 
ders and we looked up at the temperature on the Prudential Building, I 
guess it was, and it said 104 degrees. It felt like it was hotter than that. 
The next bank we called was the Harris Trust Company and they said, 
'Come on over and we'll take you to lunch.' They not only took us to 
lunch, but they loaned us their limit. As I recall, it was $6.5 million, 
which tided us over this very difficult period." 

Tandy was sobered by the experience. "He vowed never to let the 
company get into that kind of shape again," North said. Shortly thereaf- 
ter, a five-year agreement was negotiated with a group of banks for a 
$50 million revolving line of credit that provided the capital to fund 
further expansion. 

On August 14, Tandy stock was the recipient of a major boost in Dan 
Dorfman's "Heard on the Street" column in the Wall Street Journal. 

"The phrase 'specialty retailer' turns a lot of investors on, and for 
good reason," Dorfman wrote. "Big money has been made in the stocks 
of a variety of such merchants — from discount druggists to catalog 
merchandisers. Now A.G. Becker has come up with what it believes 
will be another investment winner in the field, namely consumer elec- 
tronics, or, more specifically, the home audio equipment market. And in 
this vein, the brokerage concern is voicing enthusiasm for Tandy... a 
nationwide specialty retailer of such equipment." 

The Becker plug for Tandy, written by Christopher C. Stavrou, 
stressed Radio Shack's ability "to increase sales, maintain gross mar- 
gins and consistently increase its market penetration at the expense of 
other retailers." It noted that Radio Shack was "aggressively opening 
new units," and predicted the company would continue "its excellent 
growth record." Stavrou strongly recommended the purchase of Tandy 
stock and forecast the price would move to the mid-5 0s six to nine 
months down the road. 

Stavrou was equally bullish about the consumer electronics industry 
as a whole. 

"The generation that began as the postwar baby boom and was 
brought up on stereo and hi-fi sound in the 1960s now is entering an 



DISASTER IN A RICE FIELD 331 

age bracket with increasing purchasing power," he opined. "This cus- 
tomer will continue to respond favorably to the advances in audio 
equipment technology, notably improvements in sound fidelity and in- 
creasing miniaturization and reliability of components and parts. Over 
the past ten years, sales of home audio equipment grew 171 percent, 
from $726 million in 1961 to about $2 billion in 1971. In terms of con- 
sumption per U.S. household, the advance was 126 percent to $30.18 
from $13.33 in the same period. Over the past five years, according to 
the Electronic Industries Association, dollar sales of radios, phono- 
graphs, tape equipment and other products, such as transceivers and hi- 
fi components, grew 51 percent." 

At Tandy headquarters in Fort Worth, the column evoked an appre- 
ciative response. Finally, it seemed, somebody on Wall Street was artic- 
ulating what Charles Tandy had been preaching since 1963. 



Chapter 22 
Radio Shack Goes International 



The seven men seated in the living room of the spacious apartment 
on Curzon Avenue knew that something was up. They had heard the ru- 
mors about an overseas venture. Still, the tension in the room was 



strong enough to feel as Charles Tandy rose to his feet. He stood in a 
corner of the room, his cigar clutched in his left hand, his glasses 
perched on his forehead. Sir John Gielgud never occupied a center 
stage with more aplomb. 

"We're going international," Tandy emoted. "We're going to open 
Radio Shacks all over Europe, and you guys are going over there to do 
the job." 

One of the men in the room would later recall that he couldn't help 
thinking, as Tandy made his pronouncement, of a newsreel he had seen 
in the early days of World War II of Adolf Hitler standing in front of 
a map that covered the wall behind him and proclaiming: "Today Ger- 
many, tomorrow the world!" 

But this time there were no "Sieg Heils" reverberating through the 
room, only the bemused looks on the countenances of the seven men 
making up Charles Tandy's audience on that chilly January morning in 
1973. They had received telephone calls several days earlier summon- 
ing them to a meeting in the apartment on Curzon. They had no inkling 
of why they were wanted in Fort Worth. 

Some guessed about what was to transpire. Now they had it straight 
from Tandy's own lips. They were going to blaze a new trail for Radio 
Shack into the Old World. 

The men who were present in the room that blustery January morning 
had been recruited from the top echelon of the Radio Shack marketing 
ranks. Three of them, Jim Buxton, Ken Gregson, and Dean Lawrence, 
dated from the Tandy Leather Company days. Buxton was now a Radio 

333 



334 RADIO SHACK GOES INTERNATIONAL 

Shack regional vice president in Southern California; Gregson, a re- 
gional vice president in Columbus, Ohio; and Lawrence, a former assis- 
tant regional manager in Chicago, was now the general manager of the 
Allied Radio Division. 

The others in the room were Bruce E. Russell, Richard J. O'Brien, 
Jon A. Shirley and Tony Bernabei. Russell joined Radio Shack in 1966 
as director of franchise operations and was now a regional vice presi- 
dent in Boston. O'Brien joined Radio Shack in Boston in 1956 as man- 
ager of the mail order department and was now a regional vice 
president in Philadelphia. Shirley began his career in 1958 as a depart- 
ment manager of a Radio Shack store in Boston and was now merchan- 
dise manager of the Radio Shack Division in Fort Worth. Bernabei, 
who had been with Radio Shack since 1969 and served in mergers and 
acquisitions and as head of the franchise department, was a regional 
vice president in Fort Worth. 

Tandy laid out the program for the group. 

"Those marketplaces overseas are primed and ready for us. It's a 
huge market and it's high time we tapped into it. We've been wanting 
to expand our horizons. Now is the time to do it." 

It was Tandy at his upbeat best. 

"What we've done here we can do there. What has worked for us in 
the States will work over there. We know how to sell. We know how to 
make money. That's what counts. Sure, there are those who are op- 
posed to our going overseas, who feel we're doing fine on our own turf. 
So why take on the headaches and the risks of expanding overseas?" 

His answer: "The time to do it is when you're riding High, when you" 
can afford it. If we wait until later, it may be too late." Tandy reminded 
the men in the room that they were part of a management team he had 
personally hand-picked and developed over the years. 

"When you've brought people to a certain level, you've got to have 
things for them to do," he asserted. "You've got to have places to move 
them, offer them new challenges and new rewards. If you don't use 
them, you'll either lose them or they'll dry up and stagnate. You people 
are supposed to have some moxie. Now's your chance to show it." 

The fact was that Tandy had been unable to find places for most of 
the seven in his planned centralization of Radio Shack operations. 

Tandy told the group that a new International Division was being 
formed and that it would be headed by Russell, who would carry the ti- 
tle of division president. Russell would be moving from Boston to Fort 



RADIO SHACK GOES INTERNATIONAL 



335 



Worth, from where he would oversee the overseas operations. Berna- 
bei, Buxton, Gregson, Lawrence, O'Brien, and Shirley would become 
vice presidents of the International Division and would be heading 
overseas with their families. 

There were still a lot of questions, including the key one of where the 
European invasion would commence. 

Jim Buxton's recollection was that Tandy "left it pretty much open 
where we should go," and Ken Gregson claimed the credit for suggest- 
ing that the operation should begin in Belgium or Holland. 

"I'd already decided in my own mind before I got to the meeting that 
Charles was going to tell us he wanted to open in Europe," Gregson re- 
called, "and I'd already picked out where I wanted to go. I wanted to 
go to Antwerp or Brussels, and the reason was that Holland and Bel- 
gium were the two smallest countries in Free Europe, they were the 
easiest to move money into and out of, and they each had a major port, 
Rotterdam and Antwerp. Because they were small countries, their gov- 
ernments and agencies would be easier to deal with, and their laws 
were such that we could do more there than we could do in the larger 
European countries." 

son said he finally gave the nod to Belgium. "I just decided we should 
go to Brussels," he recounted, "and that's what I finally told Tandy at 
the meeting." 

When Tandy asked what had led him to his conclusion, Gregson an- 
swered, "A number of things. First of all, Belgium is the smallest coun- 
try in Europe. We won't be dealing with state governments, as we do in 
the States. We'll be dealing with federal governments. And since Bel- 
gium is the smallest country, it'll be the easiest to deal with." 

Then he threw in the clincher. 

"NATO is in Brussels," he declared. "There must be a reason for that. 
SHAEF is in Belgium, at Mons. There must be a reason. Belgium has 
been overrun by so many people over the years, that a Belgian just kind 
of shrugs his shoulders and says, 'Ach, so take it or leave it.' So, in es- 
sence," Gregson concluded, "Belgium would be the easiest country to 
set up in. By far, easier than Germany. By far, easier than the other 
countries." 

When someone asked why not start out in the United Kingdom, 
Gregson replied that his research indicated it would be more difficult to 
set up an operation and do business there. 



336 RADIO SHACK GOES INTERNATIONAL 

"You've done some homework," Tandy acknowledged. 

"I had been around Charles for so long/' Gregson recounted, "that I 
could see the handwriting on the wall. I knew he had a vision of build- 
ing a worldwide company. He wanted worldwide recognition, and to 
gain that he had to go international. We were already doing the job in 
the States. We were already in Canada. What else was there for us to do 
when we were enlarging our scope but go international? I came to Fort 
Worth thinking that's exactly what we were going to do." 

Before leaving for the meeting he convened a family council attended 

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"I told them I believed that Charles was going to want me to go over- 
seas and help put together an international division for Radio Shack," 
Gregson said. "This was a big step for us as a family. It meant going to 
a foreign country to live, and I wanted to know how they felt about it 
before I committed myself." 

Kenneth asked his father how long he thought the assignment would 
last. Gregson figured about two years, and Kenneth said, "This is an 
opportunity to live overseas that I'll probably never have again." Lisha 
got up and put her arms around her father. "Dad," she told him, "you 
haven't made any mistakes yet that I know of, why should I worry 
about it now." Faye Gregson threw her hands up and said resignedly, 
"Whither thou goest, I goest." She had followed her husband on a suc- 
cession of assignments in the 20 years he had worked for the Tandys, 
first for Bill and then for Charles. She didn't relish pulling up stakes 
and moving to a foreign country, but this wasn't the time to put her foot 
down. 

Gregson' s homework, which had impressed Tandy, was not wasted 
on his colleagues. Although a long discussion ensued, in which every- 
one spoke his piece, it was finally decided that Belgium would be the 
country in which the European operation would be launched. 

"We agreed we were all going to Brussels," Gregson said. 

But it turned out, Tandy had other plans for one member of the 
group, Dean Lawrence. Tandy informed Lawrence he had another des- 
tination in mind for him. When the significance of what Tandy was pre- 
paring to tell him hit Lawrence, he said, "Charles, you wouldn't." 

"Why wouldn't I?" 

"Charles, you couldn't." 

"Why couldn't I?" 



RADIO SHACK GOES INTERNATIONAL 337 

"You don't really want me to go to Japan?" 

"Why not? We gotta do business there, too." 

Tandy's choice of Lawrence for the Tokyo assignment was based pri- 
marily on the fact that he had been stationed there during World War II. 
Lawrence was not particularly happy about going back, but finally 
agreed. His stay in Tokyo would be of short duration, however. Soon 
after his arrival he informed Tandy there was no way he was going to 
be able to open any stores in Japan and make any money under the 
government restrictions on foreign operators. It was a story other 
American businesses encountered before and since. It was all right to 
buy in Japan, but virtually impossible to sell anything there. 

Tandy took the news calmly. 

"No problem," he told Lawrence, "ships sail in more than one direc- 



tion." So Lawrence and his wife, Sara Mae, and their four children 
waved goodbye to Tokyo and headed south to Sydney, Australia, where 
their welcome was considerably warmer. 

With the decision made that the overseas venture would commence in 
Brussels and Tokyo, planning for the operation got under way and con- 
tinued in Fort Worth for the next week. 

"We really got down to brass tacks," Gregson said. "All of us re- 
mained in town, holding meetings every day. We also were checking 
with people about how to do business in Belgium, what we were going 
to need when we got over there. We checked with the banks about cur- 
rency regulations. Dick O'Brien and I went to New York to look into 
the types of transportation we'd be utilizing — barge traffic, truck traf- 
fic, ocean traffic. There were a million things we found that we had to 
brush up on, things we were going to have to do." 

In late January, 1973, Bernabei, Buxton, Gregson, O'Brien, and Shir- 
ley took their wives on a two-week visit to Brussels. 

"We wanted to show them the lay of the land," Gregson said. "Our 
wives, of course, were concerned about schooling, about housing. They 
needed to find out about these things and help make the decisions about 
them, because once we got over there and started putting the operation 
together, we weren't going to be able to take the time to do that. They 
were going to have to do their thing while we were doing our thing. So 
it was important that everything was jelling right. 

"When we got there, we checked with people at J.C. Penney and 
Sears, who were operating over there. We met with the banks, with 



338 RADIO SHACK GOES INTERNATIONAL, 

lawyers, with other people who could help us. We had to select a law 
firm and selected Coudert Brothers. It was a business fact-finding 
trip for the guys and a living fact-finding trip for the gals. We had 
to find out what the price of housing was, about the kinds of leases 
they had over there. We found out that you took pictures of the house 
you leased before you moved in and took pictures when you moved 
out. It was another world over there and we were going over stark cold 
blind." 

Jim Buxton, his wife, Jody, and their two sons, Dick and Tom, were 
die first of the Tandy group to settle in Brussels. The Buxtons renteu an 
apartment. Tony Bernabei and his wife, Olivia, and Jon Shirley, his 
wife, Mary Lee, and their three children followed in late February. 
They set up housekeeping in rented houses. 

The Gregsons returned to Columbus after the Brussels junket and put 
their home up for sale and made arrangements to take their children out 
of school. While in Brussels, they rented a house and enrolled the chil- 
dren in St. John's, a small private school in Waterloo that was affiliated 
with St. John's University in Washington, D.C., and was, therefore, ac- 
credited in the States. 

"It took about 30 days for the house in Columbus to sell," Gregson 
said, "so it was March when we finally moved to Brussels. It was a to- 
tal change for us, a total change in lifestyle, food, in everything." 

From the outset, it was supposed to be a team effort, Gregson re- 
counted, with each member of the group having a special area of inter- 
est: Bernabei in opening stores, Shirley in merchandising, O'Brien in 
advertising, Gregson in store locations and Buxton in distribution and 
warehousing. That was the game plan. 

"We had a lot of people pulling at us," Gregson said. "The Yamaga- 
tas (of A&A Trading Corporation) wanted us to go the United King- 
dom because they said we couldn't get licenses to import goods into 
Belgium. I told them, 'No, the reason you want us to go to England is 
that you think it's easier from your standpoint. I've been assured we 
can get licenses in Belgium.'" 

Then Buxton decided he wanted to go to England, Gregson reported, 
"because he found out they spoke English there." Buxton had a prob- 
lem, Gregson said. "He wasn't going to deal with people in another 
language." 

Buxton agreed that he began pushing for England after he began en- 
countering unforeseen difficulties operating in Belgium. 



RADIO SHACK GOES INTERNATIONAL 339 

"The first thing we ran into that Charles never realized," Buxton said, 
"is that you can't take your money over there. You can borrow all right, 
but at 21 percent. We couldn't stand that. Also, I was trying to get mer- 
chandise into Belgium, and they had more damn restrictions than you 
could shake a stick at. I had a beautiful location picked out for a ware- 
house in Antwerp and I had plans drawn for it. But we kept having 
problems and more problems. 

"So I went to England, where you could speak the language and ev- 
erything was great. The only restriction we had over there was in pock- 
et calculators. I called Charles and told him, 'We're all pulling in 
opposite directions. No one is seeing eye-to-eye on anything. The 
smartest thing in the world for us to do is go to England, get used to 
this foreign country where all of us can speak the language, and we can 
make this thing profitable in a year. Then we can take on another 
country. ,,, 

Of the group that Tandy sent to Europe only Bernabei could speak 
any language other than English. With a degree in modem languages 
and literature from Princeton, Bernabei was fluent in seven languages. 
He had lived in nine countries and served in Army Intelligence during 
World War II, interrogating German and Italian prisoners. 

Buxton recalled asking Tandy why he selected Bernabei, a relative 
newcomer to the company, to be part of the initial overseas contingent, 
and Tandy replied, "Because he's the only guy we've got who can 
speak the language." Then, Tandy added, "None of you guys knows 
which wines to order with the food over there. Bernabei is the only guy 
we've got who can do that." 

Bernabei was never quite accepted into the Tandy hierarchy, perhaps 
because of his Ivy League background and the fact that he was an out- 
sider whose corporate roots were neither in the Tandy Leather Compa- 
ny nor Radio Shack. He was recruited by Bill Tandy and joined the 
organization after Charles' heart attack in October, 1968. 

Bernabei was then with C.I.T. Educational Buildings, Inc., a subsid- 
iary of C.I.T. Finance, in New York. He and Bill Tandy had worked to- 
gether on a dormitory building program for small colleges, with C.I.T. 
providing the financing and Bill's company, Southern Mill and Manu- 
facturing of Tulsa, doing the construction. 

"One day I was in Bill's office in Tulsa," Bernabei related, "and 
I told him that I wasn't really happy with my situation at C.I.T. And 
he said, Tf that's the case, you ought to talk to Charles Tandy.' Bill 



340 RADIO SHACK GOES INTERNATIONAL 

had been expressing concern to some of his fellow directors about what 
he deemed to be a lack of management depth in the company. He had 
really been shaken by his brother's heart attack." 

Bernabei's initial meeting with Tandy took place in Tandy's hospital 
room in Boston. 

"My first impression of Charles Tandy was of him sitting in his paja- 
mas on the edge of the bed with a yo-yo that he played up and down, 
thinking of it as a product that you possibly could sell batteries for 
because it had a light in it. He was always intrigued by that sort of 
thing. And I thought, ; Dear me, what am I getting into? Here's a guy- 
playing with a yo-yo who's just had a heart attack!' Well, we talked 
and talked. And he said, 'If everything goes well, I'll give you some 
stock.' He didn't mean he'd give it to me. I'd have to pay for the stock 
ultimately." 

The announcement that Bernabei joined Radio Shack in a new staff 
position as executive vice president was made in a news release on 
March 23, 1969. 

The word around Tandy headquarters in Fort Worth was that Bill 
Tandy had sold his brother on bringing Bernabei into the organization. 
Jim Buxton offered this scenario: 

"Bernabei was really hired by Bill Tandy who sent him to Fort Worth 
to be executive vice president of Tandy Corporation, but when he got 
there Jim West wouldn't let him have the job. So they made him execu- 
tive vice president of Radio Shack with no duties." 

Bernabei said that after he accepted Charles Tandy's offer to join the 
company, he spent "some time with him trying to find some sort of slot 
in corporate headquarters. When he named me executive vice president 
of Radio Shack, I really didn't understand the implications of what ex- 
ecutive vice president meant. Years later I realized that the message in 
the corporate world is that the executive vice president is going to be 
the president of the company. But that never occurred to me. I just 
plowed ahead doing the things that needed to be done. Because the or- 
ganization was in place, my first job was in mergers and acquisitions." 

His major acquisition was of Antennacraft Company, Inc., of Bur- 
lington, Iowa, a manufacturer of television antennas, for $1.2 million in 
cash and notes in May 1970. He was named a regional vice president of 
the Central Region in 1972. He recalled bragging to Tandy after his 



RADIO SHACK GOES INTERNATIONAL 341 

first year on the job that his was the best region in the country, with $35 
million in sales and $3.5 million in pre-tax profits. 

Chomping on his cigar, Tandy retorted, "Bernabei, have I done any- 
thing to keep you from doing $70 million?" 

Bernabei reported that before going overseas, each member of the 
task force signed a contract stipulating he would serve abroad two years 
at the same salary he was receiving in the job he was relinquishing. 

"Charles' attitude was that we could move into any country and do 
exactly the same things that we did in the United States," Bernabei 
opined. "But it just wasn't to be. Some specific instances are that in the 
United States we did the five-cell flashlight battery promotion and one 
year gave away two million flashlights. The gimmick was that we gave 
away five-cell flashlights that cost us only 90 cents and the profit on 
the five batteries we sold to go with the flashlight was a lot more than 
the cost of the flashlight. That was a marvelous promotion like the bat- 
tery card, where you came in once a month and got a free battery. But 
once we got you in the store, you usually bought something." 

The problem was that promotions like these were illegal in Germany, 
Bernabei found after setting up operations in that country. 

"In Germany," he said, "you couldn't use the battery card. You 
couldn't use the flashlight promotion because the very strong lobby of 
the small store owners had established a law that you can't give away 
samples. Charles couldn't understand that. 

"'What do you mean you can't use the battery card? Why can't you 
give away flashlights?'" 

Another successful stateside Radio Shack promotion, giving lifetime 
guarantees on hi-fi speakers, also couldn't be employed in Germany, 
Bernabei recalled, because of another law that banned guarantees. 
Bernabei described the case that precipitated the enactment of the legal 
barrier. 

"There was a guy who rebuilt chimneys, and what he would do is re- 
build a chimney and give a 20-year guarantee. And the German lawyer 
asked him, 'How long have you been in business?' And he said, 'Ten 
years.' And the lawyer said, 'How can you give a 20-year guarantee if 
you've only been in business 10 years?' And that's how the law got on 
the books." 

There were other problems, too. 



342 RADIO SHACK GOES INTERNATIONAL 

In Germany, the Tandy group encountered a strong "nationalistic atti- 
tude," Bernabei said, "where consumers just wouldn't buy a product 
that wasn't German-made. It had to be Blaupunkt or another German 
manufacturer." 

In Belgium, he pointed out, there were French-speaking areas and ar- 
eas where Walloon was the prevailing tongue. Sending a catalog print- 
ed in French to a Walloon-speaking individual meant he not only would 
not buy your product but would probably bad mouth you, to boot. 

"We all lived in Brussels. We had a central warehouse at Naninne, 
just outside of Brussels, that supplied all of Europe. We opened stores 
in Holland, Belgium, Luxembourg, Germany, and, eventually, France. 
We couldn't go into Italy because the law wouldn't permit it. And we 
were also in England. We had our own warehouse in Birmingham that 
supplied all of England. We called our stores, Tandy, because, in Ger- 
many, especially, Radio Shack would not come out so good." 

Gregson spoke of the feelings of optimism that pervaded the group 
before it began encountering the realities of operating on foreign soil 

"We knew there was going to be a lot of competition over there. 
There was Blaupunkt, ITT, Siemens, Philips, and others. But they 
weren't merchandising the way we were. They didn't do business the 
way we did. We saw a huge marketplace in Free Europe, a common 
market they were trying to put together, of 290 million people. We 
knew there were national border problems to overcome that we didn't 
have in the States. We didn't know what the difficulties were going to 
be. We'd just have to go over there and find out." 

They quickly found out that space was at a premium in Exirope. 

"We were used to running 2,500-square foot Radio Shack stores in 
the U.S. In Europe we were going to have to do with 1,000 square 
feet," Gregson reported. "We had lots of shopping centers and malls 
here. They didn't have them in Europe. So it was really a totally differ- 
ent kind of operation." 

In addition, Gregson said, Tandy didn't earmark any funds or give 
them a budget with which to work. He remembered an occasion during 
the second year of the European operation when Tandy complained to 
him, "Gregson, I knew this was going to cost us money, but did it have 
to cost this much?" 

As he began looking at potential warehouse sites in Europe, Gregson 
couldn't help being influenced by the successful Radio Shack practice 



RADIO SHACK GOES INTERNATIONAL 343 

of operating central warehouses from which it shipped merchandise to 
stores across the United States. 

"We had found it was cheaper and more efficient to do it that way," 
he said. "When we got to Europe, we decided to set up a central ware- 
house in Belgium from where we should ship into all of the other coun- 
tries. People didn't understand. They would ask, 'Why would you take 
it from Germany, buy it in Germany, take it to Belgium and ship it back 
into Germany?' Our answer was, 'That's the way we do it.' We could 
actually show them how we saved money by doing it. We could control 
the inventory better and we could get better use out of our money." 

The site that was selected was in Naninne, 42 miles south of 
Brussels. 

"It's right on the north, south, east and yv^tj^^xw^sm^j^s right 
on the River Meuse," Gregson said. "It was ideally located. We could 
get to France from there, to Holland and to Germany and to Luxem- 
bourg. We'd use the port of Brussels." 

There was another plus to the choice of Naninne as the site for the 
warehouse and the headquarters for the operation, according to Greg- 
son. Naninne was French-speaking, but the first store to be opened in 
Belgium was to be located near Antwerp in a Flemish area. 

"So we could say to everyone we weren't playing favorites," Gregson 
said. "We were supplying jobs in both the French and the Flemish parts 
of the country. This would keep us from getting involved in this French 
versus Flemish business." 

The first hurdle that had to be overcome was getting permission to lo- 
cate the operation in Naninne and secure the necessary import permits. 

"It helped that our lawyers, Coudert Brothers, had an office in Brus- 
sels and had connections with Rene Close, the governor of the Prov- 
ince," Gregson disclosed. "We convinced the authorities and the 
governor that we were the kind of people they wanted. We were a clean 
industry, nonpolluting. We weren't into heavy manufacturing. We 
didn't generate noise. Most of all, we were going to supply jobs, which 
was what the country desperately needed." 

The operation began in a rented, 30,000-square-foot building while 
the new warehouse was being built. Gregson now encountered some 
problems with the contractor about the type of structure he wanted. 

"I didn't want a warehouse that was going to last 300 years, which 
was the way they built things there," he explained. "I wanted something 



344 RADIO SHACK GOES INTERNATIONAL 

which was utilitarian. 1 found out there was a strand steel type erection, 
with the skin and the insulation available from Luxembourg, and I con- 
vinced the contractor to check with them. We wanted a cement slab 
poured and then the steel skin put up. The contractor's response was, 
'But the building won't last." 5 

Gregson finally convinced the contractor that the building would 
probably not be used for longer than 20 years and that by then some- 
thing entirely different would probably be needed. 

The first store opened in August of 1973 in Aartselaar, near Antwerp 
on the main highway to Brussels. It bore the name, Tandy International 
Electronics. 

"Charles wanted Tandy in the name," Gregson said. "He wanted to 
establish a name, so that later it might be possible to utilize it with oth- 
er things like Tandy Leather." 

The first store was twice as large as the average 1 ,000-square-foot 
outlet that was opened in Europe because of the fact that Gregson was 
able to make a deal with a former Tandy subsidiary, Pier 1 Imports. 

"Pier 1 had a store in Aartselaar in a building that was too large for 
them," Gregson reported. "So we made a deal to take 2,000 square feet 
of their space, and we put in a wall to separate the two operations." 

Gregson remembered another problem that arose from the fact that 
everyone was on vacation while he was trying to get the store ready for 
the August opening. 

"In July everybody goes on vacation, and I had to literally build the 
store from scratch with the help of three young Flemish men that I got 
hold of because all of the building trades and everybody else were on 
vacation and I couldn't find a carpenter anywhere." 

So Gregson and his helpers put in the partitions, the vinyl asbestos 
tile flooring, the showcases and the shelving by themselves. They even 
had to find the aluminum extrusions to put in the glass showcase tops. 

"We worked around the clock to get the store ready," Gregson re- 
collected. 

To expedite the delivery of the first shipment of merchandise from 
Houston, Dick O'Brien sat on the dock in Brussels to make certain the 
two containers cleared customs and were trucked to the store in 
Aartselaar. 

"Now," said Gregson, "comes the funny part. We got two containers 
of U.S. merchandise that ran on 110 volts and 60 cycles, and we were in 
Europe where everything was 220 volts and 50 cycles. This was really 
hilarious. Our merchandisers were real geniuses. European television 



RADIO SHACK GOES INTERNATIONAL 345 

sets are totally different from what we have in the States, but they sent 
all of the television supplies, connectors and everything else for U.S. 
television. Every turntable they shipped turned at 60 cycles, not the 50 
we needed. That was easy to correct. We could get adapters to adapt 
them down to 50. Okay? But what do you do with a clock? We could 
buy transformers and take 220 down to 110 and operate the clocks. So 
we bought transformers and we put adaptors on the turntables." 

Gregson vividly remembered trying to explain to a customer that 
there would be no problem with a clock-radio because it was 110 in- 
stead of 220. 

"I told him I would give him this transformer to go with it, so it 
would operate," Gregson related. "And he told me in his broken Eng- 
lish that things ran on 50 cycles in Belgium and that this was a 60- 
cycle clock." 

Gregson said that he laughingly told the customer, "Don't worry, I'm 
not going to charge you for the clock, and, besides, it will tell the cor- 
rect time every six hours." 

The customer laughed and bought the clock-radio. 

The first advertising they did used the word "Sale" which turned out 
to be illegal and caused them to be hauled into court. 

"It seems," Gregson explained, "that there are certain 'Sold' periods 
in Europe, in January and July, when you are permitted to slash prices 
and say, 'Sale.' But after you do that, the merchandise that was 'on 
sale' has to be taken to the storeroom and not be shown again until you 
have another 'Sold' period. This prevents you from raising the price of 
the marked-down merchandise." 

They also gave away free flashlights at the opening, which was un- 
heard of in Europe, and incited Belgian flashlight manufacturers to haul 
them into court on the grounds the Americans were taking away their 
livelihood. 

"In France," Gregson recounted, "we couldn't say things in a certain 
way because they've got people who look after the French language 
and if you say the wrong thing, you're in court." 

They had less of a problem in Belgium, where the officials they dealt 
with seemed to appreciate the fact they were trying to learn the rules 
and abide by them. Their attitude was, "We know that you're trying. 
And as long as you're trying, we won't have a problem." 

The opposite was true in Germany. There, Gregson said, "if you 
broke the rules, you broke the rules. The theory was, you should know 
the rules. If you didn't, that was too bad." 



346 RADIO SHACK GOES INTERNATIONAL 

In Holland, most of the difficulties they encountered stemmed from 
the fact they were competing on the home turf of Philips, the mammoth 
consumer electronics company. 

"Every time we got ready to open a store in Holland," Gregson re- 
vealed, "Philips would have the local magistrate or other authority 
come down and slap us with a rule they said we had broken, like we 
didn't have the right kind of a back door. So we couldn't open the store. 
They were doing their damnedest to keep us from operating. So I got 
mad, and in one day we opened three stores in Eindhoven, which is 
their headquarters. We had the mayor's nephew install the back doors, 
so they wouldn't find anything wrong with them. So, of course, they 
found something wrong with the stairways to the basement and some 
other stuff." 

Gregson sighed as he recounted the incident. 

"Those were the kinds of problems we were facing every day," he 
said, "and nobody in the States could understand this. The people in 
Fort Worth were constantly on our backs asking, 'Why can't you do 
this? Why can't you do that?'" 

# # # 

By 1974, the group that had left Fort Worth a year earlier with such 
high hopes and unanimity of purpose was no longer a unit. It had been 
dissolved, with different people setting up shop in different countries. 

Tandy chastised them, "You went over as a team but you can't func- 
tion as a team because everybody feels they have to be territorial." 

"We broke up the group because there seemed to be a few problems 
we couldn't solve," was Gregson's appraisal of what happened. 

"Dick O'Brien was gonna worry about England. We'd sent him to 
England because we'd decided we couldn't ship across the Channel 
with all the problems that entailed. I'd gone over to England with Dick 
and we'd put in a warehouse in Birmingham and started opening stores. 
Dick was running that operation, but was still living in Brussels. 

"Tony Bemabei was sent to Germany, but also continued to live in 
Brussels. We tried to get him to go to Frankfort because that was where 
the American community was. But Tony made a tour and decided that 
he was going to put in an office m Ducsseiuon. oo nc put in tue Onice 
there and started opening stores in Germany. The merchandise was 
shipped out of the warehouse in Belgium. And I'm running Holland, 
Belgium and France from Belgium and Jon Shirley is in Belgium with 
me as merchandiser and advertiser." 



RADIO SHACK GOES INTERNATIONAL 347 

Jim Buxton returned to the States in the latter part of 1973 to become 
involved with another project, Giant Store Corporation of Boston, and 
Tony Bernabei returned home in 1975. In 1976, Bruce Russell was re- 
lieved of his duties as president of the International Division and Dick 
O'Brien was supplanted by Carroll Ray and Bob Bourland in England. 

Meanwhile, Gregson developed diabetes. 

"The change of lifestyle and all the rest had worked havoc with me," 
Gregson said. "At one point, I dropped down to 138 pounds. Every- 
body kept telling me I was crazy, that I shouldn't stay over there, but 
my attitude was that I had gone over to do a job and I wasn't coming 
back until the job was done. Charles was worried about my health and 
tried to get me to come home. He insisted I come back every six 
months for a visit. .j0i^t|rM._Fa3^and I were visiting with him in Ins 
office and he said to me, 'When are you gonna come home?' And be- 
fore I could answer, he looked at Faye and said, 'He's a hard-headed 
sonuvabitch, isn't he?' And she said, Tt's your fault. You raised him.'" 

Gregson told about a conversation with Tandy on one of his trips 
home when they began reminiscing about the old Tandy Leather days. 
Gregson recalled how he had to carry bulky 100-pound rolls of cowhide 
up and down a narrow flight of stairs in the store he managed in St. 
Louis during the 1950s and '60s. 

"Charles knew what I was talking about," Gregson said, "because 
he'd seen me do it, wearing a brace on my leg. And he asked me if I re- 
membered how many steps there were on that staircase going down to 
the basement. I told him, T sure do. Do you?' And he said, There were 
16 steps.' And he was right. There were 16. And I said to him, 'I'm 
sure glad you remember.' 

"And Charles said, T watched you carry a lot of leather up and down 
those steps.' And I said, 'Yes, by God, and never once did you put out 
your hand to help me.' And Charles looked me in the eye and said, 
'Gregson, I wasn't about to put out my hand to help you because I 
didn't want you getting lazy.' And then he added, 'But you don't know 
how happy I am that you don't have to go down steps like that 
anymore.'" 

Gregson remained in Europe until May of 1979. The European opera- 
tion finally showed an overall profit during his last year there. 

"It took us five years to get profitable," he recalled. "Germany was 
not profitable when I left. France and Belgium were profitable. Holland 
still had some problems. The bulk of the profitability was in Belgium." 



348 RADIO SHACK GOES INTERNATIONAL 

In Australia, where Dean Lawrence set up shop in Sydney in 1973, 
progress had been steady, if not spectacular. By the time Dave Christo- 
pher supplanted Lawrence in January of 1977, there were about 100 
Tandy Electronics stores in operation, all on the eastern coast, in Syd- 
ney, Melbourne, Adelaide, and Brisbane, where most of the population 
was concentrated. There were no stores on the west coast, where Perth 
was the only market. 

Christopher, who had been a Radio Shack district manager in Kansas 
City and a regional manager in New York, had just been transferred to 
Fort Worth as a divisional manager, when he volunteered to go 
overseas. 

"Along with the promotion to divisional manager," Christopher ex- 
plained, "came an oath that if we accepted the job, we also accepted the 
fact that at some point in our divisional manager career we would be 
assigned overseas. I was very antsy about the overseas assignment. So I 
decided the best thing to do was tell Bill Nugent, then the executive 
vice president of Radio Shack, that I wanted the first overseas assign- 
ment that opened up. I didn't care where it was, I just wanted to go. At 
that time, Ken Gregson was in Belgium and I understood that his health 
wasn't real good. So I thought there was a very good possibility I 
would go to Belgium. I even encouraged my wife to take French 
lessons." 

Mrs. Christopher had just signed up for the course when Nugent 
broke the news to Christopher that he was in line for the next overseas 
assignment which was going to be in Australia. This was in early Octo- 
ber of 1976, and Christopher was told he would be leaving for Australia 
in January. 

Tandy's response, when he learned from Nugent that he had selected 
Christopher for the Australian assignment, was to exclaim: "I know you 
haven't taught him anything, so you'd better send him to me on Satur- 
days so I can teach him what's really going on." 

So Christopher began going to Tandy's office for Saturday classes. It 
turned out to be an interesting, if somewhat unusual, experience. 

"I was unsure what the format was going to be," he recalled. "Was I 
aoincr to be taught as if T was in school? Or was I eoins to be asked a 
lot of questions? As it turned out, the Saturday sessions entailed just sit- 
ting in one of the chairs in front of Tandy's desk. He had a constant pa- 



RADIO SHACK GOES INTERNATIONAL 349 

rade of people coming through his office. It might be John Wilson 
wanting to talk about Color Tile. It was just one person after another 
who would kind of line up outside his door. Charles would listen to 
their problems and I'd just sit there listening to one subject after 
another. 

"They'd talk about Color Tile, Tandy Leather, Merribee, and just 
change from person to person, and I was just listening. I wasn't expect- 
ing that. But what Charles was doing was giving me a chance to see 
first-hand how a chief executive dealt with problems. I was amazed at 
his ability to change subjects, from what was going on in this company 
to what was going on in that company, to handle this kind of problem 
to that kind of problem. He was absolutely on top of everything. When 
somebody called him on the phone, Charles would .puLhim_on the 
speaker. Of course, they had no idea who was listening in on the con- 
versation. Charles didn't seem to care." 

For three months, Christopher spent his Saturdays with Tandy. 

"I'd usually get there at 8:30 or 9 o'clock," he recounted. "Charles 
was never there. He would come in about 10 o'clock and go practically 
all day. People would quit coming into his office around 5:30 or 6, and 
then Charles would sit around and shoot the breeze about what was go- 
ing on. His wife would usually starting calling around 6 or 7 and ask 
him when he was coming home. He'd say, Tn a few minutes,' or 'we're 
about to wind up,' and he'd carry on for another hour or two. Some- 
times it would take two or three more phone calls, 'Are you through 
yet?' 'How much longer?' 'We're supposed to be at so-and-so's right 
now.' 

"Those Saturday sessions would end somewhere between 6 and 10 
o'clock at night. We'd go to the Fort Worth Club for lunch, have a 
sandwich or a hamburger. On a few occasions, he wanted to go and vis- 
it stores late on Saturday afternoon. We'd get in his car and I'd drive. 
We'd drive around and he'd pick a store and we'd stop and he'd go in 
and start asking the store manager, if he wasn't busy with a customer, 
how he was doing. He'd ask him questions about his P&L. It was abso- 
lutely an experience to see the man operate." 

Tandy never did talk to Christopher about Australia. But, in retro- 
spect, Christopher conceded, he learned a great deal about running a 
business. "I got the sense," he added, "that Tandy was trying to teach 



350 RADIO SHACK GOES INTERNATIONAL, 

me lessons. He was taking me into his confidence on things that were 
going on. When someone left his office, he'd often continue talking 
about the problem they'd been discussing." 

Australia, when Christopher arrived there in early 1977, was still un- 
profitable. Business was "pretty good," Christopher found. Australia 
had always enjoyed better sales than most of its European counterparts, 
better by comparison when translated into U.S. dollars. It was losing 
money mostly because of low gross margins. 

"The stores and the product line were essentially the same as in the 
States," Christopher found. "Dean had done a good job establishing the 
stores and establishing procedures. We rented space for the stores 
which were a little smaller than those in the States. The business hours 
were very odd. There was no shopping in the evening. By law, the 
stores could be open only one night a week and that was on Thursdays. 
The rest of the days they had to close at 5:30. On Saturdays, they had to 
close at noon. Sunday shopping absolutely was not allowed. It was very 
different from the U.S. at that time, where shopping hours were ex- 
panding like crazy and it was becoming very common to be open every 
night of the week. And in some places, where the laws permitted it, we 
were opening on Sunday." 

In Christopher's first year at the helm, Australia turned a profit, and 
he recalled a meeting in Fort Worth with Tandy and Nugent upon the 
conclusion of that first profitable year. 

"Nugent was very pleased, of course, that Australia had gotten profit- 
able," Christopher related. "One of the reasons it had gotten profitable 
was that I immediately went in and propped up gross margins on mer- 
chandise. We'd wound up raising prices like crazy and, furthermore, 
we'd gone through a devaluation of the currency that had further driven 
up prices. As a result we were just barely making last year's sales. 

"I can recall Nugent being so proud and telling Charles how smart he 
had been in picking me to go to Australia, because I'd had this big turn- 
around and gotten the thing profitable," Christopher continued. "And 
Charles just looked at him and said, c Yeah, but the son of a bitch has 
got a sales loss.'" 

Christopher returned to Fort Worth in July. 1980 and was placed in 
charge of all international relations, including corporate responsibility 
over A&A Trading Corporation. He was named president of A&A 
Trading in 1989 and in 1992 was promoted to executive vice president 



RADIO SHACK GOES INTERNATIONAL 351 

of Radio Shack with responsibility for merchandising and advertising, 
while retaining his position as president of A&A Trading. 

In 1986, Tandy Corporation spun off its retail operations in Australia, 
Canada, the United Kingdom and Europe as a new publicly traded 
company named InterTAN. Each Tandy shareholder received one share 
of InterTAN stock for each 10 shares of Tandy Corporation stock held 
as a tax-free dividend. 

Management's rationale for the move was that it would permit Tandy 
to concentrate on maximizing the opportunities afforded by its domes- 
tic operations and give InterTAN the flexibility of aggressively adopt- 
ing solutions to its specific problems. 

A total of 2,119 company-owned and dealer/franchise retail outlets 
was spun off to InterTAN, including 888 in Canada, 826 in Europe and 
336 in Australia, plus 69 export dealers. 

The profitable Canadian operation had not been a part of the Interna- 
tional Division until the spin-off. It was included in the package in or- 
der to make it more attractive to investors. 

Dave Christopher added his perspective on the venture that had be- 
gun so auspiciously in Charles Tandy's apartment on that chilly Janu- 
ary morning in 1973: 

"Charles had the vision that these guys to whom he'd assigned re- 
sponsibility had enough experience to be able to do the job and that it 
should be virtually no problem. His attitude was, Tf we can do it here, 
why can't we do the same thing over there?' But he found out it was a 
huge problem. It cost us a lot of money and we learned a lot of lessons 
about doing business in those countries." 

In a Fortune magazine article published in December, 1976, Irwin 
Ross wrote: 

"Tandy Corp.'s foreign operation, begun in 1973, is another potential 
source of profit, if and when it gets turned around. With 353 stores in 
Australia and Europe, it has yet to make money and last year racked up 
an operating loss of $8.5 million. Once again, Tandy blames the people 
he sent over to run the stores. 'I feel the European market is as big as 
the U.S.,' he says, 'but being successful there is another chapter we 
haven't written.'" 

Unfortunately, the chapter would not be written during his lifetime. 



A 'Giant' Deal Falls on Its Face 



It was deja vu at the First National Bank of Boston. The bank was in 
big trouble with a loan, and once again it had turned to Tandy to bail it 
out. 

The ailing company was Giant Stores Corporation, a 40-store dis- 
count department store chain in New England that also operated 14 
Summit catalog showrooms in New Jersey, 43 Dairy Mart conve- 
nience-food stores, a health and beauty aids wholesale operation, and 
two import companies. At the time the First National Bank brought 
Tandy into the Giant Stores picture, it and two other lenders, the State 

Qtrp^t PcmV of Rnqtnn pnH fV>o Pn?r!pt>fiq! Tncnrsmi?* 31 Potnnflnv fltnoH to 

lose $31.5 million in loans they had made to the discount retailer over 
the previous three years. 

Giant had already approached a number of other mass merchandisers 
to feel out merger possibilities, among them Zayre, King's Caldor, J.M. 
Fields, and K-Mart. All had backed off after scrutinizing the numbers. 
"A look at the books was all we needed to make up our minds," one 
major discounter was quoted in Home Furnishings Daily. 

In March of 1973, Giant management forecast "substantial losses" es- 
timated at about $4 million for the 1972 calendar year. Following this 
announcement, Giant board chairman Theodor Kaufman and vice chair- 
man Alfred Bloom resigned their positions, and Jack H. Shapiro took 
over as president and CEO. 

When the First National Bank offered Charles Tandy the opportunity 
of acquiring Giant Stores in the spring of 1973, his first thought was to 
utilize Bill Tandy's old company, Tandy Industries, Inc., of Tulsa. 
Charles had assumed the title of board chairman of Tandy Industries af- 
ter Bill's death. 



353 



354 A 'GIANT' DEAL FALLS ON ITS FACE 

"It was sort of like letting the scrubs play the first quarter of the foot- 
ball game," Phil North explained. "If the project fell on its face, Tandy 
Corporation would be protected. If it turned out to be a winner, Tandy 
Corporation had the capital to move it along." 

In early April of 1973, rumors began circulating that Tandy Corpora- 
tion was looking into acquiring Giant Stores. On April 6, Jim West is- 
sued a statement, "There's been some talk and we may be talking about 
some sort of plan, but that's no indication that we are necessarily going 
to buy." 

When the rumors began hitting where it hurt the most, in the price of 
Tandy stock, Bill Michero was forced to make a more definitive state- 
ment. On April 10, after Tandy tumbled three points, Michero attributed 
the sell-off to the "confusion" between Tandy Industries and Tandy 
Corporation. 

"I want to make it clear that we are not crawling into bed in any re- 
spect with Giant Stores Corp.," Michero declared. "We were evaluating 
the possibility of sub-leasing some of the Giant premises for whatever 
of our operations we thought might do an effective job there." 

Michero emphasized that Tandy Industries was not a part of Tandy 
Corporation, but was primarily involved in pre-fab housing and build- 
ing college dormitories and hospital facilities. 

The deal that was worked out called for Tandy Industries, the First 
National Bank, State Street Bank, and Prudential to provide a three- 
year revolving line of credit of up to $8 million, or $2 million each, to 
Giant Stores, secured by substantially all Giant assets, including in- 
ventory. 

Tandy Industries would provide management consulting to Giant and, 
in turn, would receive warrants to purchase a majority of outstanding 
Giant stock at $3 per share or book value as of June 30, 1973, which- 
ever was lower. In addition, Tandy Industries was to receive a call at 
the same price per share on shares of the company held by its former 
management and certain stockholders. Exercise of the warrants would 
give Tandy Industries control of Giant Stores and its $50 million in 
sales. The word among the wise was that with Tandy Corporation's fi- 
nancial clout and management behind it, Giant could turn into another 

steal. 

The majority of the outstanding Giant loans of $31.5 million were ex- 
tended 10 years to June 30, 1983, with no amortization during the first 
three years. 



A 'GIANT' DEAL FALLS ON ITS FACE 355 

By an interesting coincidence, the date of the agreement, April 1, 
1973, was the 10th anniversary of Tandy's acquisition of Radio Shack. 

"Charles had been up in Boston piddling with the Giant thing for 
about 30 days," Jim Buxton, who later became involved in the project, 
reported. "The First National Bank of Boston had asked Charles to 
come in and take a management deal, and he did it with Tandy Indus- 
tries. Giant was a $50 million company," Buxton added. "They had 
stores like a small K-Mart, about 40,000 to 60,000 square feet. They 
sold everything. Beautiful. They caught Charles' eye. They were oper- 
ating from New Jersey to Maine, all over New England. They had Gi- 
ant stores, galleries, tobacco stores, dairies." 

Buxton had been in Europe when the Giant deal was made. Later that 

Y?^ Tandy via transatlantic cable It was a Tuesday, 

he recalled, and they were going over what was happening in Europe, 
when he said to Tandy: 

"I understand you've tied into another monster back there in Boston." 

Tandy's response was, "Yeah, get yourself on an airplane and be here 
Friday." 

What Buxton found when he arrived was a company with a serious 
cash flow problem and liabilities that outweighed assets by about two- 
to-one. 

"We tried real hard to make it work," Buxton said. "It was a chain 
that we could have done a world with. We worked on it, worked on it, 
trying to spin things out of it, but it just wouldn't fly. There was no way 
to make it go. We worked real hard to get our money out of it and then 
exercised our option to get out of the management contract and shut it 
down." 

Mary Frank, who also was involved in the Giant project, recalled that 
"it was the same kind of business like Edison's, and it was going 
broke." But Tandy, she added, "saw in it the possibility of another 
Radio Shack." 

Tandy then put together a strike force made up mostly of accoun- 
tants, and sent Miss Frank with them to the Giant headquarters in 
Chelmsford, Massachusetts. 

"My assignment was to put out a catalog," she said. "This outfit had 
not made a catalog and I hadn't done one for 10 years. I thought 
Charles was out of his mind. But he said, 'Your job is to put a catalog 
together.' And we did. It was ready to go to press. It was at the print- 
er's, one of the best jobs I ever did, when they said, 'Stop.' Charles de- 



356 A 'GIANT' DEAL FALLS ON ITS FACE 

cided there was some monkey business going on in the company and he 
pulled out. Then everybody came home and that was the end of that." 

The Giant Stores venture came to an end with the resignation of 
Tandy Industries from its management agreement on October 25, 1973. 
Giant Stores eventually filed for protection under Chapter 11 of the 
Federal Bankruptcy Act, listing $50.5 million in debts. Creditors were 
told they could expect between 8 and 10 cents for each dollar owed 
from the sale of assets. The sole survivors of the company were five 
Summit catalog showrooms in New Jersey. 

The October, 1973 issue of Boston magazine, in a lengthy article by 
Gerry Nadel, recounted the Giant story. This is how Nadel described 
Charles Tandy to his readers: 

"That's Tandy of Texas, boy. Tandycrafts Tandy. Radio Shack Tandy. 
Giant Stores Tandy. The guy holding together the whole ball of wax. 
And you'd better get the message. He's the same Charles Tandy who 
bailed the First National out of that Radio Shack mess ten years ago. In 
fact, that's how he got into this... invalid is too mild a word. Sinking 
ship, maybe. A sinking ship with gunpowder in the hold and a fire on 
deck. And they called in Tandy... A very memorable man, $500 million 
a year memorable, and now when the Boston bankers found themselves 
in $50.5 million worth of Giant trouble, they remembered the man 
who'd bailed them out ten years before. Tandy's little stint of Samari- 
tanism ten years ago got him Radio Shack— a thousand stores today. 
This time the betting was that Tandy might walk away with all that 
would be left worthwhile of Giant." 

Unfortunately, this time there was nothing worthwhile remaining. 

* * * 

Meanwhile, Tandy Corporation continued to rack up double-digit 
gains in sales and earnings, reporting a sales increase of 22 percent and 
a 24-percent rise in net income for the quarter ended March 31, 1973. 
The gains were not reflected in the price of Tandy stock, unfortunately. 
Much of the merchandise that Tandy purchased came from overseas, so 
the value of the dollar impacted the cost of goods. A devaluation of the 
dollar in mid-February of 1973 caused a one-day drop of 3% in the 
:„„ „*-+x,o, c*- nr Ar +™ o nmr \n™ of ?.A Onlv a month earlier, the stock 

had stood at 42 5 /s. 

In the face of the reaction on Wall Street to the devaluation, Charles 
Tandy issued a statement, "We don't believe this devaluation is going 



A 'GIANT' DEAL FALLS ON ITS FACE 357 

to have a hard impact on us. We bought merchandise in anticipation 
and in sufficient quantity to see us through a turnaround." 

He added that the ability of the consumer electronics industry to offer 
goods at a wide range of prices would help meet price increase pres- 
sures and possible consumer reaction. 

In late February, Tandy had sat down with a writer from the National 
Tattler for a wide-ranging interview. Admitting that he once had 
planned to retire when he reached the age of 40, he added, "But I found 
out that I was just learning what I was supposed to do. My early plans 
were to work like hell, make some money, and retire and enjoy it. But I 
found the enjoyment I got from money was not based on having it or 
spending it, but on working with it and making it do things and 
grow=:making people perform and grow. I've had much, much more 
enjoyment after age 40." 

Tandy said there were two secrets to his success. 

"First, there is the knowledge that there is the opportunity to suc- 
ceed," he observed. "Second, there is something that has not been prop- 
erly emphasized — selling." 

To make his point, he asked: "What is a politician, a banker, a law- 
yer? He's a salesman first. A banker has got to sell his services. You 
can be the best lawyer in the world, but you aren't going to be very 
successful with no clients. Billy Graham is the perfect example of a 
salesman. He's selling his product with all kinds of belief and deter- 
mination." 

Selling, Tandy contended, should be one of the first moves for a per- 
son starting out in life. 

"When you sell something, you then appreciate what it costs and 
what efforts are needed. Being a salesman, you can excel in many lines 
of business. Young people should look at selling as an opportunity for 
training, because they are going to be salespeople, one way or another, 
for the rest of their lives." 

In addition to selling the virtues of salesmanship, Tandy was also on 
a Radio Shack store-opening tear. 

In April of 1973, 27 stores were opened. In May, 40 more stores were 
added, bringing the total close to 2,000. Once again the question arose: 
How many Radio Shacks could the country accommodate? 

Charlie Tindall, who once had talked of a maximum of 1,500 stores, 
was now expanding his horizons. In an interview with Chain Store Age, 



358 A 'GIANT DEAL FALLS ON ITS FACE 



he said he believed there was "room enough for more than 3,000," add- 
ing that Tandy was planning to open Radio Shacks at a rate of 500 to 
550 units each year "from now on." 

Asked what would happen when the saturation point was reached, 
Tindall emphasized that the company was already engaged in exploring 
new worlds to conquer overseas. 

But despite the new store openings and strong sales and earnings, 
Tandy stock continued its downward slide. On August 21, 1973, it 
closed at a new low of 18V4 on heavy volume, propelled by what Bill 
Michero called the "snake-in-the-grass" syndrome. He had coined the 
expression in an interview with Reuters News Service. 

"The snake," he explained, "is the fact that Tandy belongs to a group 
of companies called specialty retailers — a group once loved and pres- 
ently being shunned by some investors and analysts." What had hap- 
pened, Michero groused, was that one specialty retailer had been 
experiencing problems, and now all members of the group were suffer- 
ing from the fallout. 

"It's the way the market is," Michero philosophized. "Our stock held 
up for a long time, but then we really got shot." 

The principal bugaboo being attached to Tandy stock was that its 
earnings, which had been growing at more than 20 percent annually, 
would come under pressure when the economy started to slow and con- 
sumers stopped having as much discretionary income to spend on 
Radio Shack staples such as stereos and tape recorders. Another prob- 
lem was the fact that Tandy was a major importer of products from Ja- 
pan and thus would be hurt by the recent revaluations of the yen. 

Two Dallas analysts, Lynn McCormick of Eppler, Guerin & Turner, 
Inc., and John McStay of Underwood, Neuhaus & Co., disagreed with 
this scenario. 

"Just look at Tandy's earnings progression during the last economic 
slowdown," McCormick said, "and I really think that any fears about 
its performance in the near future, if indeed there is a slowdown, have 
been greatly overdone. So, too, have any questions about its depen- 
dence on Japanese products been greatly overdone. Tandy stock is un- 
denounced and I'm recommending it." 

Dismissing the concern over discretionary income, McCormick point- 
ed out that the average purchase at a Radio Shack store was between 
$10 and $15. 

"Such a purchase is not like the choice of buying a car or a boat in a 
recession," he added. 



A 'GIANT' DEAL FALLS ON ITS FACE 359 

McStay opined, "Tandy is not alone in selling Japanese-made prod- 
ucts. So if it has to raise its prices, so does everyone else, which is pret- 
ty much what happened in the last yen revaluation." 

Both analysts noted that Tandy had been decreasing its dependency 
on Japan as its major supplier by diversifying its manufacturing opera- 
tions into South Korea, Canada and the United States. Radio Shack was 
now importing only 50 percent of its product mix, while an increasing 
number of items were being produced in company-owned facilities in 
the United States. Radio Shack was now operating plants in Texas, Illi- 
nois, Iowa, and New Jersey, including new audio tape, wire and cable 
manufacturing facilities and an antenna plant in Fort Worth. 

Manufacturing plants included Tandy Instruments, Tandy Electron- 
ics, Tandy Audio, Tandy -Wire- & Cable, Tandy Antenna, Tandy Mag- 
netics, Tandy Crystal, Plastellite and Community Sign, all in Fort 
Worth; Gavin Electronics in New Jersey; Antennacraft in Burlington, 
Iowa; TCE- Japan in Tokyo; TCE-Korea in Masan, South Korea; and 
ARC in Kagoshima, Japan and Masan, South Korea. 

Discussing the growth of the manufacturing capability, Lew Kornfeld 
commented, "We are simply applying the Tandy method of vertical in- 
tegration to our business — making what we sell and aiming at 100 per- 
cent somewhere up the line. Aside from profits, the motives are simple: 
(1) to gain the skills in design and technology required to keep us in a 
position of leadership; (2) to achieve product exclusivity, and (3) to re- 
duce dependency on the ability of external suppliers to keep pace with 
our needs. The archaic notion that retailers can't be producers has been 
dispelled by our accomplishments to date." 

Charles Tandy told an interviewer from Audio Hi~Fi that he insisted 
the company determine from retail experience if a product was a "fad 
or permanent" before tooling up to make it. Then, he said, "cost- 
win" — the start-up expense versus total dollar volume and profit of the 
product — was tallied. 

In-house manufacturing, Tandy said, afforded greater flexibility in 
designing product lines and improved communication between the re- 
tailer and the supplier. But the most important advantage was the cost 
reduction obtained by "eliminating the markup for the middleman." 

Tandy pointed out that most of the hi-fi receivers sold by Radio 
Shack had been made for some time by Tandy plants in Japan and Ko- 
rea; that antennas for radio, TV, and CB were being made in the United 
States, and that wire, cable, and replacement crystals also were made 
by Tandy and sold by Radio Shack. 



360 A 'GIANT' DEAL FALLS ON ITS FACE 

"If you sell enough hamburgers," he quipped, "eventually you would 
do well to enter ranching." 

In late September of 1973, Financial World noted the beating Tandy 
was taking on Wall Street in spite of its impressive growth and earnings 
performance. 

"If one had to choose from among a multitude of factors that have 
been responsible for shareholder frustration this year, prime among the 
list would have to be the way stocks have skidded even though com- 
pany earnings have soared. And Tandy Corporation's stock simply has 
to be considered one of the best examples of this malaise. Not only 
have Tandy's sales and earnings grown steadily year after year for the 
last decade, but the outlook is for more of the same in spite of tough 
competition." 

The article described how Tandy's book value per share had jumped 
1,400 to 1,500 percent in the last decade. Yet, between 1972 and 1973, 
its stock had slumped by 65 percent and its price/earnings multiple had 
plunged from 35 to 10. 

An investor buying Tandy would be getting a "volatile security that 
fairly crackles with static," the article concluded. "It is no sleeper. L tue 
company's future is as good as its past, and that, of course, will have to 
be proved, the depressed Tandy common stock could well sound a bet- 
ter tune for its shareholders in an improved stock market environment." 

# # # 

Despite the down market as the year drew to a close, Charles Tandy 
was as upbeat as ever as he raised a glass of Dom Perignon to toast the 
advent of 1974 at a New Year's Eve gathering with a group of close 
friends. 

For Tandy personally, 1973 had been a rewarding year. There had 
been some ego-satisfying recognition, including a flattering invitation 
from David Rockefeller to join the prestigious Advisory Board of 
Rockefeller University, a research institute that had been founded by 
John D. Rockefeller, Sr. 

During the year, Tandy had added another leading Fort Worth busi- 
nessman to his board, William C. Conner, chairman of the board of Al- 

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ophthalmic products, was started by Conner and Robert D. Alexander 
shortly after World War II in the back room of their ethical pharmacy. 
The company was sold to Nestle, Inc., in 1978 for more than $400 mil- 
lion. Conner remained a Tandy director until his death in January, 1992. 



A 'GIANT' DEAL FALLS ON ITS FACE 361 

Tandy also had been elected president of the Fort Worth Exchange 
Club, the most select organization of business and professional men in 
town. And he had been tapped for the presidency of the Fort Worth Art 
Museum, an indication that some of Anne Tandy's interests were be- 
ginning to rub off on him. Tandy, in fact, was particularly proud of his 
wife's art collection which graced the walls of the mansion they shared. 
This, however, led Tandy into artistic circles he had not previously fre- 
quented. And one night, it led him into a classic bit of one-upmanship 
at the expense of a pompous art collector. 

The man, who had already antagonized everyone in the room with his 
continual references to his art collection, turned condescendingly to 
Tandy and asked him whether he collected art. 

Tn a small way," Tandy responded. He then whipped a couple of 



sheets of paper out of his coat pocket and began to read off a list of 
names of artists whose works decorated the walls of his home in Fort 
Worth. The names included Braque, Chagall, Gauguin, Picasso, Leger, 
Miro, and Toulouse-Lautrec, among others. 

The man who had asked the question slunk away, having finally met 
his match. 

Shortly after the start of the new year, Tandy finally made a person- 
nel move he had been putting off for some time out of deference for his 
feelings for Jim West. On February 28, 1974, he announced that West 
had been named to the newly-created position of vice chairman of the 
board of Tandy Corporation and that John A. Wilson had replaced him 
as president and chief operating officer. Wilson, who had been with the 
company since 1951, was the corporate vice president in charge of the 
Color Tile, Wolfe Nurseries, and Royal Tile operations. 

West, whose seniority dated back to 1930, had become a legendary 
figure at corporate headquarters where tales of his frugality abounded. 

He once kept Charles Tandy and a group of company executives 
waiting and shivering outside a restaurant in Chicago one wintry 
evening while he went over the check item by item, causing Tandy to 
note drily: 

"We may all get pneumonia out here but Jim's gonna make sure we 
weren't overcharged." 

As a store manager, West was taught to hold down expenses. He au- 
tomatically turned out the lights when he left a room, even the bath- 
room. Sometimes this meant that someone still in the bathroom would 
be left in the dark. This could prove to be embarrassing at times. CO. 



362 A 'GIANT' DEAL FALLS ON ITS FACE 

Buckalew, who for many years ran the computer center operation, told 
Herschel Winn of an occasion when he had been left in the bathroom 
with the lights out when Charles Tandy walked into the room. 

"Hey, Buck," Tandy asked him, "what are you doing here in the 
dark?" 

West was approaching his 71st birthday when he relinquished the 
corporate presidency to assume the more or less honorary role of vice 
chairman. Eunice West had been urging her husband to retire, and now 
he finally acquiesced. 

"I had him write out a retirement letter and give it to Charles," she re- 
counted. "That same day, Charles came to the house and sat down in 
the den. He took the letter out of his pocket and tore it up. And he said 
to me, T know who was behind this letter. Don't you ever do that 
again. Jim West will be with me as long as he can walk to that office.' 
Oh, Charles was so angry with me." 

West retired in 1981 at the age of 78 upon the completion of his 51st 
year with the company. He died on November 11, 1983, at the age 
of 80. 

"He put everything he made back into the company," Mrs. West re- 
called. "All of his net worth was in Tandy stock." 

In March of 1981, West gave away $15 million in Tandy stock to 11 
Fort Worth institutions. The major bequest of $12 million went to 
Texas Wesleyan University to build the Eunice and James West Li- 
brary. Other recipients were Texas Christian University and the Univer- 
sity of Texas at Arlington, which established chairs in their business 
schools, and W.I. Cook Children's Hospital, Junior Achievement, Boy 
Scouts, Girl Scouts, YMCA, Happy Hill Children's Camp, the Fort 
Worth Boys Club, and Fort Worth Girls Club. 

West downplayed the importance of the gifts. 

"We have no children," he said in a newspaper interview, "and we 
both feel that wealth must be used properly. You know, these days the 
effort to protect your wealth becomes harder and harder and more trou- 
ble than the money is worth. So why put yourself to all that trouble 
when you can use your money to bring happiness to many people?" 

Then he added, "Oh, they won't remember me too long even if my 
name is on the library. You just want to leave the world a little better 
off than when you arrived," 



A 'GIANT' DEAL FALLS ON ITS FACE 363 

Although the Wests lived in a comfortable home in a fashionable area 
of Fort Worth, their neighbors were surprised at their affluence when 
the bequests were publicized. 

"My friends said to me, 'You could have been riding around in a 
Rolls Royce,'" Eunice West remembered. "Well, the material things 
didn't mean a thing to us. We were blessed with our health and you 
can't buy that." 

In the early part of 1992, as the result of a gift of $9.3 million from 
Eunice West, ground was broken for the James L. West Presbyterian 
Special Care Center in Fort Worth. The facility will be devoted to car- 
ing for persons with Alzheimer's disease and other dementia, and as- 
sisting their families. 



In early 1974, at the urging of Charles Tandy, the Tandy Corporation 
board of directors belatedly addressed the problem of the continuing 
disappointing performance of the company's stock. At a board meeting 
on April 4, 1974, the directors approved a program to reduce the num- 
ber of shares outstanding by up to two-million shares through an ex- 
change offer for a new issue of subordinated debentures. 

The offer permitted shareholders to turn in all or part of their hold- 
ings of common stock to the company and receive 20-year subordinated 
debentures, callable after two years at 105, and bearing an interest rate 
of 8/2 percent. The face amount of the debentures was to be 22 percent 
above the market price of the common stock on the effective date of the 
exchange offer, but not to exceed $35. 

On April 18, the exchange offer was amended to fix the face amount 
of the debentures at $29 per share and increase the interest rate from 
8 V2 percent to 10 percent. Despite the higher interest rate and an exten- 
sion of the deadline from June 30 to August 9, the exchange offer fell 
short of the 2-rnillion share goal. A total of 1,218,772 shares of com- 
mon stock was tendered in exchange for $35.3 million of the newly- 
authorized 10 percent subordinated debentures. The shares acquired in 
the exchange were subsequently retired. 

In a talk to New York securities analysts, Charles Tandy explained 
the rationale behind the exchange offer. 

"One of the functions of the offer was to recognize and respond to 
the growing importance of current yield within the investment commu- 



364 A 'GIANT' DEAL FALLS ON ITS FACE 

nity and among individual investors," he declared. "The flight of in- 
vestment monies from equities to high-yielding short-term debt 
vehicles needs no repeating here, hut pur management was keenly 
aware that many of our long-standing shareholders were being trampled 
in the stampede. 

"The exchange offer gave our shareholders the opportunity to change 
vehicles, and those who did are still ahead of the game at this time. It 
was interesting that almost no institutional shareholders participated in 
the exchange and that only 1,218,000 shares came in while the offer 
was prepared to accept 2 million shares." 

During 1974, Tandy Corporation also had acquired 579,300 shares of 
its common stock in the open market at a cost of $12 million, or an av- 
erage price of $20.76 per share. The highest and lowest prices paid 
were $30.75 and $17.50 per share. These shares also were retired. 

Tandy's purchase of its own stock was noted in a Wall Street Journal 
article on June 20, 1974 that declared: 

"The hundreds of companies that began buying back some of their 
own stock on the open market generally cite similar reasons: With 
stock prices so low, buybacks were an economical way to obtain shares 
for making acquisitions and fulfilling employee stock-option plans. 
Usually left unsaid was that buybacks can boost the price of the stocks, 
or at least keep them from falling as much as they otherwise might." 

But as the 1974 fiscal year came to a close, Tandy stock was still 
trading in the $24 to $25 range. 

The company's 1974 performance was impacted by the loss of $7.1 
million, or 67 cents per share, from the sale of Leonards and the dis- 
continuance of the General Retailing Marketing Group. But net sales 
from continuing operations rose 27 percent to $579.1 million and net 
income from continuing operations increased 29 percent to $27.5 mil- 
lion, or $2.59 per share. 

Radio Shack again was the star performer, recording a 34 percent 
gain in sales and a 50 percent jump in earnings. The Radio Shack Divi- 
sion now was producing 62 percent of Tandy Corporation's total sales 
and 78 percent of its total divisional income. 

No wonder the Annual Report declared. "As Radio Shack grows, so 
grows Tandy Corporation." 



Chapter 24 

A Triple Play for Tandy 



Who would have believed that in the recession year of 1975 a rather 
innocuous item called a citizens band radio that had been around for 
more than a decade would suddenly bolt out of no^^ 
newest national fad since the hula hoop? 

"It's unreal what's happening," said Robert Katz, a Radio Shack buy- 
er, about the CB radio phenomenon. "It's our fastest-growing item." 

He wasn't talking about a hula hoop-priced product, either. Buyers of 
CB radio equipment were spending anywhere from $60 for a 3-channel 
set to $350 for a 23-channel unit with sidebands. But, in spite of the 
faltering economy, CBs were selling like hot cakes. 

Propelled by the CB boom, Radio Shack sales were on an upward 
track, in sharp contrast to the generally drab retailing picture nation- 
wide. While other retailers were singing the blues and pulling in their 
horns, Radio Shack was opening new stores and giving face-lifts to its 
old ones. 

"I don't think this country's in as bad a shape as our commentators 
would have us believe," an ebullient Charles Tandy told the members 
of the Downtown Fort Worth Rotary Club. "Our business has been 
good," he added, "and that's nationwide." 

For the first nine months of the 1975 fiscal year, Tandy Corporation 
reported a 33 percent increase in sales and a 50 percent increase in 
earnings. 

"We have been told that our Radio Shack sales record this past year 
has been remarkable," Charles Tandy declared in a talk to a group of 
Los Angeles bankers and financiers. "We have been told that our re- 
sults have been impossible in view of what has been happening to the 
grand old names of retailing. Current economy efforts by consumers, 



365 



366 A TRIPLE PLAY FOR TANDY 

and the cost savings attached to do-it-yourself products, have produced 
these results. Citizens band has reached boom proportions and now rep- 
resents 13 percent of Radio Shack sales, while areas of high unemploy- 
ment, such as Detroit, have shown higher sales gains than other areas." 

Radio Shack opened five new stores in the Detroit area in February 
1975, in the face of what the Detroit News called "the economic woes" 
being experienced there. The new outlets brought to 33 the total num- 
ber of Radio Shack stores in the Detroit area, with seven additional 
stores scheduled to open by the beginning of June. 

Sales in the Detroit area were running up to 40 percent ahead of the 
prior year, Mark L. Seaman, the Radio Shack district manager there, 
reported. 

Where hand-held calculators had once been the hottest-selling con- 
sumer electronics products, CBs were bigger. Forbes magazine noted 
citizen band radio sales had exploded to the forefront, growing by bet- 
ter than 30 percent a year compared to 13 percent for calculators. 

"A CB radio is nothing more than a simpler, cheaper version of a po- 
lice or commercial two-way radio," Forbes reported. "Retail sales of 
CB radios were no more than $140 million in 1973. In 1975, they'll 
reach $350 million; next year $500 million. By 1980, enthusiastic CB 
makers are talking about sales of $1 billion." 

What was behind the sudden upsurge? CB radios, after all, had been 
around since 1959, when Radio Shack's first Realistic CB transceivers 
hit the market. Industry sources attributed the interest to the OPEC oil 
embargo of 1973 that spawned long lines at the fuel pumps and the 55 
mph speed limit. Truckers began using CB radios to find out where 
they could get gasoline and where police radar traps were located. This 
received a great deal of publicity and got the public interested. The 
Federal Communications Commission helped by cutting the price of a 
five-year CB radio license from $20 to $4. Between 1972 and 1975, li- 
cense applications zoomed from less than 15,000 per month to more 
than 200,000. 

The CB radio boom even spawned a new language. 

"Breaker, breaker, c'mon. This is Pig Pen. There's a Smokey Bear at 
pogo stick 227. You smooth talkers show your double nickels now or 
pay the big dime at the northbound bubblegum machine. C'mon you 
18-wheelers. 10-4." 

"Gotcha, Three Little Pigs. This is Big Bad Wolf huffm' at your back 
door. Slow twin buffaloes it is. Your rockin' chair buddy appreciates 
that. 10-4." 



A TRIPLE PLAY FOR TANDY 367 

Translated, one trucker was warning another that he had spotted a 
highway patrol car near mile-marker 227 and suggested he slow down 
to 55 mph (two buffalo nickels). 

"It's not very often you get a hula hoop in this business," Bill Nugent 
told Denver Post writer Bill Strabala. "We're able to sell everything we 
can get. But it has grown to more than just a thing to warn you where 
Smokey is. Americans like to jabber. And it helps pass the time on the 
road. But there's a safety factor, too, if you've got a flat or other trou- 
ble. CBers are nice people. They like to help. And you can also learn 
what's ahead in heavy traffic." 

Strabala wrote, "While the truckers and an increasing number of 
'four-wheelers' (passenger cars) are tuned in to their CBs, companies 
like Tandy Corporation, parent company of Radio Shack, are tuned to 
their cash registers^ Radio Shack, probably No. 1 in the CB and elec- 
tronic gadgetry markets, has increased its sales threefold in the past 
year within the CB market alone and expects to double its present vol- 
ume during 1976. And that's a 'big 10-4,' or OK, as country singer 
Dave Dudley says in one of his truck-driving songs." 

Even Charles Tandy had gotten into the act. His "handle" on the CB 
radio in his car was "Mr. Lucky." 

"Mr. Lucky" was at his swaggering best as he delivered his "What 
Recession?" pitch to a gathering of the New York Society of Securities 
Analysts in February, 1975. Announcing plans to open 30 to 40 new 
Radio Shack stores in the New York metropolitan area in 1975 and 
1976, Tandy informed the group: 

"After years of unprofitable operations, this district finally turned a 
profit last year — about 1.5 percent on sales. But to take our message to 
the public in New York's expensive advertising media, we need more 
stores. The planned additions will increase the number of Radio Shack 
outlets in the New York area to more than 130. Then we will be able 
to buy more television and radio time and more newspaper inserts be- 
cause the saturation of the market with our stores will justify the ex- 
penditures." 

Tandy told the analysts that Radio Shack planned to open 400 stores 
nationwide in fiscal 1975, but that the expansion was flexible in light of 
the current state of the economy. 

"In some areas we may not open as many units as planned," he said. 
"I don't care if the regional manager only gives me 10 stores where he 
was supposed to open 25 stores, so long as he gives me 10 winners. I 
don't want 25 if 10 are going to be losers." 



368 A TRIPLE PLAY FOR TANDY 

Tandy conceded that Radio Shack had not yet learned how 
"recession-proof ' its business was. But, he added, "We do know that in 
times of economic anxiety, and even in bad weather, people tend to 
spend more time at home. And that is where our 'do-it-yourself cus- 
tomer lives." 

He gave the analysts the following profile of a typical Radio Shack 
customer: A male, with a median age of 30, a high school education, 
household income of $10,000 and over, whose average purchase was 
$10.25, and who liked to do his own maintenance, repair, and improve- 
ment r\r\ *»1p*r*ttYvnir» rfpA/ir^e cmrl PAmmiinir , atiAiic ^miinrn^rit T-Jp> liVprl tn 

save money and "downtime" by avoiding service calls and repair bills. 

"We are not looking for the guy who wants to spend his entire pay- 
check on a sound system," Tandy reported. "The kind of customer who 
walks through our door is one who wants the maximum amount of lis- 
tening pleasure without it costing him an arm and a leg. Most impor- 
tantly, his repeat purchase pattern is high, a 60 percent repeat purchase 
factor every six months. One reason for this is that many of the Radio 
Shack products are of a consumable nature, such as blank recording 
tapes, vacuum tubes, batteries and outdoor antennas." 

There were currently nine-million copies of the latest Radio Shack 
catalog in customers' hands, Tandy informed the analysts. 

"If you will analyze the catalog in detail, and, by the way, we do just 
that to develop it, you will find that the merchandise selections and 
pricing points are slanted very strongly towards the needs of the 'do-it- 
yourself customer. We are in the 'do-it-yourself business. The line is 
limited to about 2,400 items and their unit retail price breaks down this 
way: 72 percent of the items retail from $0-$5; 16 percent from $5-$20; 
6 percent from $20-$50; 3 percent from $50-$ 100; and 3 percent from 
$100 and up. 

"This explains the viability of our typical store size which has a 25- 
foot front. It explains how we are bringing into a neighborhood trade 
area a selection of wanted products which are not readily available else- 
where. It explains how our sales personnel can become effectively 
knowledgeable of this limited number of items in a reasonable period 
of time. It also explains why some people are puzzled on their first visit 
to a Radio Shack store because they presume it to be a traditional audio 
shop. The product mix tells you that Radio Shack is much more than 
that. 



A TRIPLE PLAY FOR TANDY 369 

"When we try to measure Radio Shack's markets, we are talking 
about a product line and marketplace which barely existed 30 years 
ago, products and supplies which were rarely available to the public 20 
years ago, and a field of merchandising which began to take on the ap- 
pearance of an industry a little over 10 years ago. Today, the United 
States consumer electronics market is growing at an annual rate of 10 to 
15 percent after eliminating price inflation, and will top the $6 billion 
mark in sales in 1975." 

A fundamental factor in the company's growth was its compensation 
policy, Tandy asserted. 

"It is the reason we have attracted, held, and advanced so much dedi- 
cated talent over the years. Starting from the simple premise that for an 
employee to earn anything for the company, he must first earn some- 
thing for himself, we long ago established a program of profit-sharing 
formulas as far down into the organization as possible. This calls for 
profit-center measurement throughout the company at every store, fac- 
tory, warehouse and staff position. This is one reason we produce over 
5,000 profit and loss statements within the company each month. 

"The compensation program provides a nominal base salary, plus an 
earnings formula designed to deliver substantial additional income in 
relation to profits produced by each profit center. Admittedly, this ap- 
proach to compensation does not appeal to everyone. But for that indi- 
vidual who prefers to be compensated for his ability, it works very well. 
That is the type of person our system has always attracted." 

But finding qualified managers for the new stores was becoming a 
"tough nut to crack," Tandy conceded. The company took on 160 col- 
lege graduates in the 1974 fiscal year and hoped to double that number 
in the current year, Tandy noted. 

But, he revealed, "because expansion has been so rapid, training for 
the new managers is being held to a minimum. So the store manager 
has to be self-driven. If he runs too many price-cutting or giveaway 
promotions on his own, store profits and his income will suffer. If this 
begins to cut too deeply, then the district manager and the store manag- 
er get together to work out the problem. Other profit-shrinking prob- 
lems such as theft by employees or customers are dealt with in a similar 
fashion. The inexperienced manager is not simply left to sink or swim." 

During a question and answer session, Tandy was asked how many 
Radio Shack stores the U.S. could support. He responded, "Five years 



370 A TRIPLE PLAY FOR TANDY 

ago, some of my people thought 1,500 was the outside number. Now 
they're talking about 6,000." 

Whether it was Tandy's oratory or merely the fact that the stock mar- 
ket was chalking up solid advances, Tandy stock rebounded sharply 
during February, 1975. The stock was trading in the $16 range when 
Tandy made his appearance before the New York securities analysts, 
after trading as low as 11% earlier in the year. But by the end of Feb- 
ruary, it was up to $28 a share, making it the 15th largest gainer among 
all stocks on the Big Board for the first two months of 1975. 

Jtiarry L^auoSCiier Oi r>iyui naSuiiaii umou C6 v^u. was cSpcuictiiy kccii 

on Tandy, calling its shares undervalued and "especially attractive for 
potential capital appreciation" because of its rapid expansion. He fore- 
cast fiscal 1975 earnings of $3.75 per share and fiscal 1976 earnings of 
$4.40 per share. 

Laubscher was impressed with Tandy's track record over the past 10 
years, during which it had racked up annual growth rates of 35 percent 
in revenues, 41 percent in net income and 29 percent in earnings per 
share. He predicted new sales and earnings records in the current year 
and said the company was capable of 15 percent annual growth in per- 
share earnings over the next five years. 

"Another positive factor," Laubscher added, "is the fact that Tandy 
has been eliminating some of its general merchandising operations 
which have been a drain on profits and management time." 

The jettisoning of the marginal operations had begun on February 26, 
1975, when Tandy announced an agreement in principle to sell its 
Wolfe Nursery Division to Pier 1 Imports for $6.5 million in cash. 
Wolfe Nurseries, which had been acquired in 1966 for 15,000 shares of 
Tandy stock valued at $210,000, now operated 45 retail stores in 12 
major cities in Texas and Oklahoma. 

The day after the Wolfe Nursery sale was made public, Tandy an- 
nounced the sale of Vit-A-Way, Inc., to SuCrest Corporation. Vit-A- 
Way, which had fiscal 1974 sales of $3 million, had been acquired in 
February, 1972 for $750,000 in cash. 

Then, on April 23, came the announcement that an agreement had 
been reached under which Tandy would sell the assets of Corral Sports- 
wear Company and its two divisions, Western Leather Company and 
Buckboard Company, to El Dorado International, Inc., of Minneapolis. 



A TRIPLE PLAY FOR TANDY 371 

Corral Sportswear, a manufacturer of casual leather coats and jackets 
and leather accessories for men and women based in Ardmore, Okla- 
homa, had been a part of the Tandy stable of companies since 1961. 

John Wilson said that the sale was made "so that the capital assets of 
the company could be applied toward the larger and more rapidly- 
expanding operations of Tandy Corporation." 

As a result of the 1975 divestitures, plus the sale or discontinuance of 
Leonards, Mitchell's, and Meacham's over the prior two years, the non- 
electronics operations of Tandy Corporation were drastically reduced. 
Meanwhile, Radio Shack was expanding faster than ever. 

What was going on? Was Tandy Corporation shedding its traditional 
stripes? Bill Michero offered an insight. 

"In the bundle of companies we had left, there were still about 15 that 
were viable business enterprises and difficult to evaluate in terms of 
a sale. So the thought of a spin-off developed, and we worked on it 
for about a year-and-a-half Then the decision was made to create the 
Radio Shack operation as a clean play, without all of this other clutter 
around it. So we moved everything out that was not electronics." 

John Wilson recalled the genesis of the spin-off plan. 

"We first started talking about it one evening in Charles' office. He 
said to me, 'What the hell's wrong? Why aren't we being recognized?' 
He was talking about Wall Street. We both agreed that the reason we 
didn't have the kind of recognition we wanted was that we were a con- 
glomerate and conglomerates had lost favor. We talked about it a num- 
ber of times after that, and we both agreed that the spin-offs were 
something that we ought to do. So Charles took it to the board and the 
board said, 'Okay, let's go.'" 

The impactful armouncement that would signal a turning point in the 
history of Tandy Corporation was made on the afternoon of May 27, 
1975, in a press release that declared; 

"The Board of Directors of Tandy Corporation, following a meeting 
in Fort Worth, today announced tentative approval of a plan which 
would separate the business of the corporation into three distinct 
publicly-held companies. The plan calls for the issuance to sharehold- 
ers, in the form of a tax-free dividend, of the common stock of two new 
companies to be drawn from the handicrafts and from the leather prod- 
ucts operations of Tandy Corporation. 



372 A TRIPLE PLAY FOR TANDY 

"The resulting two new companies will be named Tandy crafts, Inc., 
and Tex Tan-Hickok, Inc. Tandycrafts' primary operations will consist 
of the Tandy Leather, Color Tile, American Handicrafts and Stafford- 
Lowdon Divisions. Tex Tan-Hickok' s primary operations will consist 
of the Tex Tan and Hickok Divisions. Tandy Corporation, under the 
plan, would carry on the consumer electronics (Radio Shack) opera- 
tions as its sole business. 

"The purpose of the plan is to provide more intensive and distinct 
management leadership of the three basic and diverse businesses of the 
company, each of which has reached substantial size in recent years. It 
will set out clearly the operating and financial progress of the three 
businesses, each with a distinctive growth pattern. It will provide share- 
holders with three clearly-defined investment vehicles, each with a sim- 
plified corporate structure and business direction. The plan also 
underscores management emphasis in developing the principal busi- 
nesses of the company. 

"Before the plan can be formally adopted, various regulatory and 
statutory matters must be determined. Assuming such matters are deter- 
mined favorably, the plan is scheduled to be adopted and implemented 
within the next few months." 

The more limiting Tex Tan-Hickok name was changed several weeks 
later to Tandy Brands, Inc. 

An announcement on August 12 spelled out the details of how the 
new shares in Tandycrafts and Tandy Brands would be spun off. Each 
Tandy shareholder would receive one share of Tandycrafts stock for 
each two shares of Tandy stock held, and one share of Tandy Brands 
stock for each 10 shares of Tandy stock held. 

Initially, Wall Street wasn't sure what to make of the announcement. 

On May 28, the day after the spin-off announcement, Tandy stock 
sank 2 5 /8 to 35 7 /« in active trading. But by late October, the stock had 
surged to 48. 

John Wilson recalled that he bought some Tandy stock in 1974 at $27 
and watched it plummet to $9 a share by the end of the year. 

"Charles couldn't believe what was happening," he remembered. 
"Our sales and earnings were going through the roof and our stock kept 
on going down. But after the spin-offs, it started going up and it kept 
on going." 

In a letter to shareholders, Charles Tandy reported on the rationale 
behind the spin-offs: 



A TRIPLE PLAY FOR TANDY 373 

"In the years between 1960 and 1972, the company made many addi- 
tions to its merchandising operations. With the passage of time, and 
with the regular evaluation of all operations within the company, those 
operations likely to make a material future contribution to the company 
were generally identified by 1973. Tests of return on capital and poten- 
tial market position were among the criteria used in determining the 
most productive marketing directions available to the company. 

"In 1973, your management commenced a program of reducing the 
variety of merchandising activities in which the company was engaged, 
so that the company's financial resources and executive experience 
could be channelled toward greater effectiveness. Since that time, the 
program has seen removal of the General Retailing Group and its asso- 
ciated projects, and the sale or liquidation of a number of other opera- 



tions, including six during the past year. These actions have moved the 
company into a new alignment which recognizes its three primary mar- 
keting strengths: consumer electronics, 'do-it-yourself merchandising, 
and leather products marketing." 

A further insight was contained in the Prospectus Summary filed with 
the Securities and Exchange Commission: 

"It is believed by Tandy's management that the separation and spin- 
off will provide a more intensive management leadership of the three 
basic and distinct businesses now operated by Tandy, and will provide a 
better framework for management decisions concerning the employ- 
ment of capital and the operations of the separate businesses. It is also 
believed that the operational and financial progress of the three busi- 
nesses, each with a distinctive business direction, will be more visible 
to stockholders, and therefore a stimulus to the executives to show 
growth and improvement. In addition, the separation will permit a 
clearer basis for evaluation of the businesses of the three corporations 
by employees, the public and the investment community, which Tandy 
expects will be of particular advantage at such time as additional capital 
may be required." 

Bill Michero put it in simpler terms, "Because we were made up of 
so many kinds of businesses, it was an awkward company to measure 
and evaluate." 

Michero spoke knowledgeably about another compelling factor be- 
hind the spin-off — the decline of handicrafts from the major position it 
occupied in the marketplace when the Tandy Leather Company was en- 
joying its spectacular growth in the 1950s and '60s. 



374 A TRIPLE PLAY FOR TANDY 

"A lot of things impacted it," he said. "We now have a generation of 
television watchers who have no interest in or time to do handicraft 
things. We've also had a demographic phenomenon of a lower birth 
rate where youth groups, such as Scouting, began a major decline in en- 
rollments. School budgets over the last 15 years have been leaning 
away from the old handicrafts things that were taught in the industrial 
arts and art sections from elementary school on up. There's a long list 
of reasons why handicrafts no longer are an expanding universe." 

Stanley Lanzet, an analyst with Kidder, Peabody, a Wall Street bro- 
kerage firm, offered an additional insight; "Investors have tended to 
view Tandy as a company with one major attraction (Radio Shack), 
plus a number of small, mostly unknown parts that detract from the 
overall valuation placed on earnings." 

His opinion was echoed by Robert J. Schweich of Wertheim & Co.: 
"If Tandy Corp. can stand as a pure operating company, the Street will 
take more of a liking to it. In addition, there's a lot more potential in the 
stock when evaluated on the basis of Radio Shack's performance. It is 
capable of achieving at least 25 percent earnings growth in fiscal '76 
and '77, and over the next two years has the potential of doubling its 
current multiple." 

On October 1, 1975, the Internal Revenue Service ruled that the 
shares of Tandycrafts and Tandy Brands stock to be issued to Tandy 
Corporation shareholders would not constitute taxable income, paving 
the way for the spin-off to become effective on October 31, 1975. 

As a result of the unbundling, 11 former operating entities of Tandy 
Corporation were transferred to Tandycrafts, Inc. They were Tandy 
Leather, American Handicrafts, Color Tile, Royal Tile, Stafford- 
Lowdon, Bona Allen, Magee, Merribee, Woodie Taylor Vending, 
Automated and Custom Food Services, and Decorating and Crafts 
magazine. 

Tandy Brands began operations with six former Tandy Corporation 
entities — Tex Tan Western, Tex Tan Welhausen, Hickok Manufactur- 
ing Company, J.M. Bucheimer, Collins of Texas, and Western Sales. 

The spin-offs involved people as well as operating entities. 

John Wilson, who had been elevated to the presidency of Tandy Cor- 
poration only a year-and-a-half earlier, was among the executives 
spun off. Wilson resigned as president and chief executive officer of 
Tandy to become president, chief executive officer, and a director of 



A TRIPLE PLAY FOR TANDY 375 

Tandycrafts. The position he vacated was not filled until 1978, when 
Charles Tandy assumed the title of president in addition to that of 
chairman of the board and chief executive officer. 

"Wilson's background was in the crafts business, in Tandy Leather 
Company, and he had been very important in the development of the 
Color Tile programs. So he was made a part of the crafts bundle," re- 
called Bill Michero. 

Michero and Billy Roland were spun off to Tandycrafts, Michero as 
vice president, secretary and treasurer, and Roland as assistant secretary 
and assistant treasurer. They had held the same titles at Tandy Corpora- 
tion. Roland would later return to Tandy Corporation. He retired as a 
vice president in 1985 after 31 years' service. 

Herschel Winn, who had been assistant secretary and corporate coun- 
sel, succeeded Michero as vice president and corporate secretary. 

Douglas H. Manning and John Cosby resigned as Tandy Corporation 
vice presidents to assume new executive positions with Tandy Brands, 
Manning as president and chief executive officer and Cosby as vice 
president, secretary and treasurer. Joining them on the Tandy Brands 
management team were William M. Manning, president of Tex 
Tan Western; Carson R. Thompson, president of Tex Tan Welhausen; 
Adolph D. Weiss, executive vice president of Hickok; Richard S. 
Bowlus, president of J.M. Bucheimer; and Frank A. Dromgoole, presi- 
dent of Western Sales. 

Charles Tandy, who wound up with four percent of the outstanding 
stock of Tandycrafts and Tandy Brands by virtue of his ownership of 
Tandy Corporation shares, assumed the title of board chairman of both 
companies. He received approximately 185,000 shares of Tandycrafts 
stock and 37,000 shares of Tandy Brands, with an initial market value 
of approximately $2.7 million, as a result of the spin-offs. 

Tandycrafts' stock began trading on the New York Stock Exchange 
on a "when issued" basis on October 17 at a price of $13 per share and 
Tandy Brands began trading over-the-counter at $7 per share. When 
Tandy Brands was listed on the American Stock Exchange in 1976, 
Charles Tandy became the only individual ever to have his family name 
listed twice, once on the New York Stock Exchange and once on the 
Amex. 

As a result of the spin-offs, Tandy Corporation surrendered approxi- 
mately 27 percent of its net sales, 24 percent of its total assets and 24 



376 A TRIPLE PLAY FOR TANDY 

percent of its earnings. This reduced its fiscal 1975 net sales from $724 
million to $528 million; its total assets from $414 million to $319 mil- 
lion, and its net income from $3.81 per share to $2.88 per share. Tandy 
also spun out the 85 1 company-owned hobby and handicrafts retail out- 
lets it was operating in the United States and Canada. 

As part of the agreement, Tandy Corporation advanced $6 million to 
Tandycrafts and $1.25 million to Tandy Brands for operating purposes. 
In return, Tandycrafts assumed $15 million of Tandy Corporation debt 
and Tandy Brands assumed a $3 million note payable to Tandy. 

Tandy Corporation was now totally in the consumer electronics busi- 
ness, with Radio Shack as its dominant entity. Radio Shack emerged 
from the spin-offs with 3,865 retail outlets, including 2,651 company- 
owned stores, 1,036 dealer stores and 178 franchise stores in the United 
States, Canada, and abroad. 

Also left in the Tandy corporate fold were A&A International, Allied 
Electronics, Antennacraft, Community Signs, Gavin Electronics, Plast- 
ellite Company, Tandy Cable, Tandy Communications Antennas, 
Tandy Crystal Center, Tandy Electronics, Tandy Fabrications, Tandy 
Instruments, Tandy Magnetics, Tandy Speakers, Tandy Wire, and TC 
Electronics. 

Commenting on the spin-offs, Forbes magazine noted, "The plot is 
simple: to let Radio Shack stand alone — and proud. What's the rede- 
ployment deal worth to shareholders? Charles Tandy's eyes light up be- 
hind his half-glasses when he recalls how generously the market values 
other specialty retailers. Look, he says, at fashion retailer Petrie Stores, 
with a price/earnings ratio of 20, or Longs Drug Stores, at 27. Surely, 
the new Tandy Corp. built on Radio Shack should sell at a P/E of 18 to 
20 rather than its current 11. If that happened, an investor would in ef- 
fect be getting Tandycrafts and Tandy Brands free." 

As it turned out, that was exactly what happened. 

# % # 

While Charles Tandy was making national news with the splitting of 
Tandy Corporation into three separate corporate enterprises, he was 
also making local headlines with the announcement that the long-antici- 

r>»tf*r\ TpnHv fVnfpr Prni^rt in Hnwntown Fort Worth was finallv goinff 

to leave the drawing board and become a reality. A beaming Tandy 
made the announcement in May, 1975 at the Golden Deeds Awards 



A TRIPLE PLAY FOR TANDY 377 

Banquet of the Exchange Club of Fort Worth, at which he and Anne 
Tandy were jointly honored as the city's outstanding citizens. 

"This is one of the big days of my life," Tandy told a packed ball- 
room at the Fort Worth Club. "I met with my board of directors this 
morning, and they agreed with everything I wanted. They have agreed 
to let us go ahead and build a new headquarters for Tandy Corporation 
in downtown Fort Worth." 

The project actually dated back to 1973, when Tandy Corporation 
purchased an eight-block site in downtown Fort Worth for $11 million 
in cash and notes and announced a $100 million joint venture with 
Ogden Development Corporation of Los Angeles. The initial phase of 
the joint venture, the announcement said, would include a 35-story of- 
Jice tower, a. 700-room luxury hotel and an enclosed shopping mall 
Charles Luckman Associates, internationally-known planning and ar- 
chitectural firm, would create the master plan. Tandy Corporation said 
it would occupy 100,000 square feet in the office building. 

The announcement stressed that the commencement of construction 
of the project would depend upon the availability of financing on suit- 
able terms and the completion of other arrangements with developers, 
architects, builders, lenders and investors. The project, however, quick- 
ly ran into several snags. 

In March, 1974, after a splitting of interests between Ogden Develop- 
ment and Charles Luckman, Charles Tandy reported he was "now talk- 
ing with other groups about the project." Bill Michero's recollection 
was that after the Tandy group spent six months working with Ogden' s 
property development division, "Ogden decided to abandon the 
program." 

In the May, 1975 announcement, Charles Tandy reported that Tandy 
Corporation would go it alone in building the Tandy Center. He said the 
initial plans for the building had been scaled down somewhat from the 
original plan, but would still constitute a major addition to the city's 
skyline. 

"I'm a little embarrassed it's not what it started out to be, but it's go- 
ing to be a start," he added. 

Ground was broken for One Tandy Center, a 320,000-square-foot, 
19-story office tower, on July 9, 1975. Construction began simulta- 
neously on an adjoining three-level shopping mall with 135,000 square 



378 A TRIPLE PLAY FOR TANDY 

feet of retail space, an ice skating rink on the street level, a two-level 
parking garage to accommodate 300 automobiles, and banking fa- 
cilities. 

Wearing a white suit and with a white hard hat sitting jauntily atop 
his head, Tandy sounded a nostalgic note to the several hundred busi- 
ness and civic leaders and city and county officials attending the 
groundbreaking ceremonies, reminding them that the site of his new 
corporate headquarters was only a block away from the two-story 
building at 2nd and Throckmorton Streets that had once served as the 
home of Tandy Leather Company. 

"When the plans for this development first evolved about three years 
ago," Tandy told the gathering, "the idea was to develop an eight-block 
area all at once. But after going outside the area and getting another 
firm to come into the venture, difficulties arose, and the original plan 
became unfeasible." 

Now, with Tandy Corporation projecting $700 million in sales and 
$40 million in profits after taxes for the current fiscal year, he said, he 
had been able to persuade his directors to move ahead with the devel- 
opment project in two phases, the second of which would include a 20- 
story office building and the first new department store to be built in 
downtown Fort Worth in more than 40 years. The 120,000 square foot 
department store was to be located in the three-level shopping mall and 
occupied by Dillard's. 

Ground was broken for Two Tandy Center on October 14, 1976, with 
Charles Tandy, Jim West and Carrie Nemser, a Radio Shack vice presi- 
dent and 22-year employee, wielding the spades. 

Janice Williams, a Star-Telegram business writer, recalled the events 
leading to the construction of the Tandy Center in a story published in 
November of 1978. 

"They laughed privately or jeered openly, and even the most dedicat- 
ed city boosters quivered for fear the dream would fall apart, when 
Charles Tandy announced his intention to reshape the city's downtown 
skyline. But then the dreamers watched it happen, bit by bit; the scoff- 
ers did a turnabout and Tandy himself lived long enough to realize his 
fondest ambition. 

"What he did — with the same driving force that reshaped a tiny fam- 
ily-held corporation into a billion dollar international empire — was turn 
an aging, decrepit part of the city into a glittering array of new con- 
struction that embraces two high-rises, downtown's first new depart- 



A TRIPLE PLAY FOR TANDY 379 

merit store in nearly half a century, and a galleria of shops and stores 
topped by a reflective dome. 

"All of this came about swiftly, in terms of construction time, once 
Tandy got the wheels in motion and began work on the eight blocks ad- 
joining the Courthouse square on the south. After his initial announce- 
ment with Ogden Corp. of Los Angeles as a joint- venture partner, there 
was a long hiatus in which nothing occurred. 

"Then, as Tandy candidly reported, 'difficulties arose,' and the agree- 
ment was off. At that point, he decided to undertake the entire redevel- 
opment alone on a 'pay-as-you-go' basis — and was proud of the fact 
that Tandy Corp. needed no mortgages, no insurance companies, no 
outside financing for the project." 

The summer of 1915 was a rewarding time for TmidyJCorBGrdiv^ 
stockholders. On July 30, the United States Investor, published in Bos- 
ton, carried the following bullish item: 

"One of the Big Board's biggest winners of 1975 is Tandy Corp. Its 
shares have more than quadrupled in price this year on strong earnings 
and word that Tandy plans to split the company into three parts.... With 
its outstanding record, Radio Shack alone is expected to command a 
higher multiple than its current P/E." 

Over the next few months, Tandy continued to receive upbeat ap- 
praisals and "buy" recommendations from brokerage houses and finan- 
cial analysts such as Dean Witter & Co., Kidder, Peabody and Co., 
Blyth Eastman Dillon & Co., the Securities and Commodities Corpora- 
tion of Northport, N. Y., Desmond J. Heathwood, Jerome H. Buff, and 
Merrill Analysis, Inc. Investors apparently were paying attention. 

On October 3, the Associated Press reported that Tandy climbed 2% 
to 40 3 /4 on news that the Internal Revenue Service decided its planned 
spin-offs of two of its operations would not be treated as taxable in- 
come for shareholders. 

In mid-October, Radio Shack announced it was discontinuing its 
quadraphonic line to place more emphasis on high-end stereo com- 
ponents, 

"We'll sell anything people want," Charles Tandy was quoted in 
Home Furnishings Daily. "If they change their minds, we'll be the first 
to admit we've made a mistake about 4-channel systems and go back 
into it with our tail between our legs." 

Radio Shack reported a 29 percent increase in sales of hi-fi receivers 
in September over the same month in 1974 and a 28 percent increase in 



380 A TRIPLE PLAY FOR TANDY 

speaker sales. But those gains paled in comparison to the 124 percent 
increase racked up by CB radios. 

"We more than doubled CB sales last year and we're going to try and 
double them again in the coming year," Charles Tandy told Home Fur- 
nishings Daily, adding that he was anticipating CB sales of $114 mil- 
lion for the first eight months of the current fiscal year. 

Another bullish scenario appeared in column by a Wall Street money 
manager in Financial World in November: 

"Speaking of specialty retailers, a lot of smart guys are looking at the 
Tandy situation. The company has recently spun off two of its operat- 
ing divisions to shareholders, leaving it essentially with its Radio Shack 
consumer electronics retail division. Oppenheimer is impressed with 
the core business and is adding the company to its recommended list. 
Earnings growth at Tandy appears to be quite viable because over 75 
percent of Radio Shack stores are less than five years old, and they 
should grow very rapidly as they mature. This is a higher ratio of young 
to mature stores than that of any other large retailer we know. 

"Tandy's record in recent years has demonstrated its ability to gener- 
ate consistent earnings growth, particularly in the recession year of fis- 
cal 1975, when both comparable store sales and earnings showed good 
increases. In the field of consumer electronics, the company is the 
dominant factor by a wide margin, which gives it greater flexibility and 
opportunities regarding manufacturing and marketing than its com- 
petitors." 

The writer's optimistic forecast proved to have a spark of prescience 
when Tandy reported December sales in excess of $113 million, a 
record for any single month in the history of the company and a 50 per- 
cent gain over December 1954 sales of $75.5 million, restated to give 
effect to the Tandycrafts and Tandy Brands spin-offs. Sales of CB 
equipment were strong during the month, but sales of merchandise oth- 
er than citizens band increased 39 percent over the prior year. 

Tandy stock also received a boost from the announcement of another 
two-for-one stock split in the form of a 100 percent stock dividend 
which was to be effective January 9, 1976, to stockholders of record on 
December 12, 1975, 

A further sign that Tandy was moving into the investment limelight 
was the announcement that options on its common stock would begin 
trading on the American Stock Exchange on January 19, 1976. 



A TRIPLE PLAY FOR TANDY 



381 



At the annual meeting on November 24, an openly jubilant group of 
shareholders greeted Charles Tandy with an enthusiastic round of ap- 
plause as he stood at the microphone and called the year "another one 
of record advance of Tandy Corporation." 

The shareholders had good reason to feel benign. 

Tandy stock was one of the big gainers on the New York Stock Ex- 
change during 1975, posting a spectacular increase of 352 percent from 
a low of UVi to a year-end closing high of 52. Of the 2,137 issues trad- 
ed on the Big Board, only one posted a greater percentage gain than 
Tandy. That was Best Products, a catalog and showroom retailer, whose 
stock rose 523.8 percent from 2V% to WA. 

In addition, Tandycrafts closed out the year at WA and Tandy Brands 
at 8. This meant that a person buying 100 shares of Tandy stock at HV2 
wound up the year with stock in the three corporations worth $5,955, a 
net gain of $3,205 or 365.6 percent, over the initial investment of 
$1,150. 

Participating in the gains were more than 7,000 Tandy employees 
who had signed up for the Tandy Corporation Stock Purchase Program 
that was instituted in May of 1975. The contributory program, includ- 
ing employer contributions related to length of service, provided for 
regular purchase by employees of the company's stock at the monthly 
average price. 



Chapter 25 
The CB Radio Bubble Bursts 



Radio Shack was now the name of the game. The only game. 

Of course, Tandy would continue to keep an eye on what was going 
on a t Tandycr aft s and Tan d y Bra n ds and th e co rpora te offices of the 
new offshoots would remain in the buff-colored brick and glass build- 
ing on West 7th Street that housed the headquarters of Tandy Corpora- 
tion. But the old feeling that everyone was playing for the same team 
was gone. For some of the old-timers like Bill Michero and John Wil- 
son, it wasn't an easy adjustment. 

Perhaps it was no coincidence that Charles Tandy ensconced himself 
in a new bailiwick downtown, a ground-floor suite in the Fort Worth 
Club Building formerly occupied by a Christian Science reading room. 
There, he claimed, he could concentrate on running Radio Shack with- 
out being subjected to the distractions and interruptions that plagued 
him at corporate headquarters. Now he could pore over his profit-and- 
loss statements, conduct meetings, rail at his executives in person and 
over the telephone, and play the genial host to the people he wanted to 
see. He claimed he loved his new-found freedom so much that he even 
refused to have his secretary, Janet Lesok, on the new premises. 

"One woman in my life bossing me around is enough," he said grin- 
ning broadly, in recognition of Anne Tandy's penchant for running 
everything she touched with the iron hand of a boss wrangler on one of 
her ranches. 

When he moved into his new office, Tandy assigned John Ellis, a 
longtime employee, to screen his telephone calls and visitors. But, as it 
turned out, Ellis was often away on other assignments, leaving Tandy 
to answer the phone himself. A visitor walking into his office unan- 
nounced one day found him talking on the telephone. 



383 



384 THE CB RADIO BUBBLE BURSTS 

"No, madam," Charles was saying, "Tandy Corporation does not sell 
bird cages." 

On another occasion, Tandy found himself trying to cope with three 
telephone calls, two on hold and one on the line. Then, with a laugh he 
turned to a visitor and remarked, "This is a multi-million dollar com- 
pany. As you can see, I'm perfectly organized." 

"He never kept to a schedule," Janet Lesok recalled. "The people 
who were scheduled to meet him for a 9 o'clock meeting would see 
him sometimes just before lunch. They'd sit there, afraid to move. We 
all had to wait our turn. I would need signatures. Sometimes I sat 
through entire meetings just to catch him to sign a piece of paper or a 
check so that I could go down and cash a check for him. 

"When I first started working for him, when I'd ask him in whose of- 
fice he was going to be, he'd test me by saying, 'Bob Lynch,' knowing 
full well he wasn't going to Bob Lynch's office. He wanted to see if I 
could find him. He also did that with hotels. TT1 be staying at the 
Plaza,' he'd say when I knew he was going to be at the Regency in 
New York. When I'd reach him there, he'd say, 'Goddammit, Janet, 
how did you find me?' Finally, after about two years, he gave up trying 
to fool me. But it always annoyed him that I was able to keep up with 
him." 

Mrs. Lesok discovered early on that Tandy was not the kind of boss 
who buzzes his secretary over the intercom and says, "Miss Smith, 
would you please come in and bring your notebook." She learned very 
quickly that he was not going to give her dictation or talk into a record- 
ing machine. 

"What you had to do," she said, "was listen to him talk enough, know 
he would talk to someone in one voice and to someone else in another 
voice, and be able to compose letters in the proper voice for each per- 
son. Now, if they were long, business-type letters, they were written by 
other people in the company for his signature. But any of his personal 
notes, just memo-type things, I would write." 

She also was in charge of sending 'gifts to friends of Tandy's around 
the country like restaurateurs Bob and Pete Kriendler, the owners of the 
'21 Club' in New York, 

"The Kriendlers just absolutely adored him," Mrs. Lesok related. "If 
his plane landed at LaGuardia at midnight, he would call. If the restau- 
rant was closed, they'd open it up for him. They loved western wear, 
the vests, the hats, and the boots, and we were forever shipping western 



THE CB RADIO BUBBLE BURSTS 



385 



goods from Tex Tan and the other western wear companies up to the 
Kriendlers." 

Another good friend who called Tandy frequently was automobile 
magnate Henry Ford II. 

"Mr. Ford always made his own calls, never placed them through a 
secretary/' Mrs. Lesok reported. "We also sent him lots of western 
stuff. That's what I was there for. To remember to do these little nice 
things, because Charles didn't have time to think about them." 

Jesse Upchurch recalled that Henry Ford telephoned Tandy quite of- 
ten to congratulate him on the company's performance. He remembered 
one year when Tandy Corporation had racked up profits of $50 million 
to $60 million and the Ford Motor Company's electronics division had 
lost about $50 million to $60 million. Tandy called Ford and asked him 
if he would sell the Ford electronics division to him. "Maybe I can turn 
things around," Upchurch said he told Ford. 

"I think Ford believed him," Upchurch said. "As a matter of fact, I 
think they came very close to making a deal And Charles could have 
financed it, because he had a lot of people who believed in him who 
would have financed any venture he wanted to go into." 

The people who believed in Tandy had ample reason for their trust. 

Radio Shack sales were booming in the aftermath of the spin-offs, 
sparked by the CB radio boom. The month-by~month increases over the 
prior year were hard to believe — 57 percent in January 1976, 60 per- 
cent in February, 58 percent in March, 42 percent in April, 40 percent 
in May, 41 percent in June. Fiscal 1976 sales were on the way to ex- 
ceeding $740 million, more than the 1975 sales of $724.5 million that 
had included the Tandycrafts' and Tandy Brands' contributions. 

The store-opening program was proceeding at a dizzy pace that 
would find Radio Shack opening nearly 1,200 company-owned and 
dealer outlets in the U. S. and Canada during the year ended June 30, 
1976, bringing the number of retail outlets in North America to 4,599 
F>r>H the numbfir worldwide to 5 154. Rst>ecia11v significant was the fact 
that the expansion program was now being financed entirely out of the 
cash flow generated by the existing stores. 

Asked by an interviewer how many stores he was shooting for, Tandy 
replied, "I feel that we can have 2,000 more." 

Profits were continuing to soar, heading towards a record $3.55 per- 
share from continuing operations in fiscal 1976, an increase of 126 per- 
cent over the prior year. 



386 THE CB RADIO BUBBLE BURSTS 



More recognition came Tandy's way. 

In January, 1976, he became the first recipient of the Spirit of Enter- 
prise Award of the Fort Worth Chamber of Commerce. In March, he 
received the Dateline Award of the Advertising Club of Fort Worth for 
focusing national attention on the city. Later that month, he was named 
outstanding chief executive officer of the year in the merchandising and 
services category by Financial World. The selection was made by a 
panel of judges composed of 48 securities analysts. Other CEOs hon- 
ored included John Swearingen of Standard Oil (Indiana), Donald T. 
Regan of Merrill Lynch, Walter A. Haas, Jr., of Levi Strauss, and Jo- 
seph F. Cullman 3rd of Philip Morris. In October, he received the 1976 
Business Executive of the Year Award and entered the Business Execu- 
tives Hall of Fame at Texas Wesleyan University in Fort Worth. 

He continued to broaden the membership of his board of directors in 
an attempt to quiet the concerns in some Wall Street circles that the 
board was loaded too heavily with inside directors. In May, Donald L. 
Bryant of New York City, executive vice president and special assistant 
to the chief executive officer of the Equitable Life Assurance Society, 
was elected a director. 

Tandy was discovered by the business and financial press, and sud- 
denly the flamboyant, cigar-smoking Texan was the focus of newspaper 
features and magazine articles about his climb from rags-to-riches. 
Writers were popping into Fort Worth in a steady stream, looking for 
an unexplored angle or a previously unpuM recipe for his success. 

Visiting journalists found him in his downtown hideaway in the Fort 
Worth Club Building, seated behind a large walnut desk, a big smile on 
his face, exuding charm, ebullience, and the aroma of 20-cent cigar 
smoke. On a coffee table nearby was a witch's head, dubbed "Miss 
Radio Shack," with a "Pull Me" tag dangling from her mouth. One pull 
and the visitor was sprayed by a stream of water spouting from the 
gap-toothed orifice. 

"It's only water," Tandy would howl, his booming laugh nearly 
drowning out the cackle that emanated from the witch's mouth. 

Decorating his desk was a plastic female breast, a gift from Anne 
Tandy. When Tandy pressed the nipple, a gong would sound signalling 
that it was coffee time. Another knickknack on his desk was a small 
peanut-filled burlap bag bearing the legend, "Nutz 2 U." 



THE CB RADIO BUBBLE BURSTS 387 

"Tandy seems incapable of giving anyone a frosty welcome," Irwin 
Ross wrote in the December 1976 issue of Fortune. "He has about him 
the warmth and exuberance often associated with Texans, but speaks 
with barely a trace of a regional accent. Talk is both vocation and avo- 
cation with him. Ask him a question about his business and he is de- 
lighted to respond for half an hour, not without eloquence and in 
sentences that march in disciplined order. When new visitors arrive, he 
often waves them to seats to listen to his dialogue with prior arrivals. 
He also has the greatest difficulty ending a conversation. The result is 
that he is late to most appointments, often by as much as an hour." 

John Merwin, writing in D magazine published in Dallas, informed 
his readers in a June, 1976 article, "Had you bought one share of 
Charles Tandy's stock in 1975, at its low of ljj£ a year l ater that 
stock would be worth approximately $88. Lots of Tandy employees, lit- 
tle old widows and various other investors are happy about that. Look 
at Tandy's own numbers. The value of his personal shares leaped in a 
year from a mere $4.3 million to $32 million." 

"I was a poor boy. I'm rich now," Tandy admitted. "I've been re- 
warded for what I do, but the opportunity is there for all I have said 
many times that I can't make enough money to satisfy myself by work- 
ing only 40 hours a week, and I'm interested in other people who want 
more money and are willing to work for it." 

Although his salary was still only $75,000 a year, Tandy's total com- 
pensation in fiscal 1976 amounted to $614,700 as a result of bonuses. 
The board raised his salary to $250,000 in fiscal 1977, and his total 
compensation amounted to $688,000. 

To an interviewer from Time, Tandy pointed out that a major reason 
for Tandy Corporation's success was the fact that everybody was at- 
tached to a profit and loss statement. 

"The majority of a man's income comes from bonuses — that's after 
performance, not before," he stressed. "I want people who live for and 
will die for this work. If they don't want to do that, let them work for 
Sears." 

Chain Store Age said about Tandy, "He couldn't care less if his man- 
agers had three heads. He only looks at their numbers." And looking at 
Radio Shack's numbers, the publication added, "It's tough to imagine a 
more successful specialty store chain. For instance: Radio Shack has 
been popping out new stores at the rate of three-a-day (average size 



388 THE CB RADIO BUBBLE BURSTS 

2,200 square feet), generating 30 percent or better yearly sales gains 
while compounding earnings nearly 50 percent a year since 1970. A 
typical new Radio Shack store in its first year of operation produces 
$300,000 in total sales and $60,000 in operating profits on an initial 
merchandise investment of $150,000, for a gross margin of 52 percent 
and a 32 percent return on investment." 

But it was Ross' article in Fortune that painted the most complete 
portrait. 

"To the people who work for him," Ross wrote, 'Tandy is an unre- 
lenting taskmaster, the kind of boss who will call up a district manager 
to explain a drop in sales and who insists that people work long hours, 
including weekends, if that's what it takes to get their job done. Be- 
cause he likes to work on Saturday morning, he expects his executives 
to show up, too. On his orders, corporate headquarters remain open on 
Saturdays from 9 to 1." 

"Very seldom does he give a compliment," Ross quoted Bill Nugent. 
"He always has something to criticize. One month this year, we ran a 
60 percent sales increase over the year before. Tandy's response was, 
'Why didn't we sell more merchandise?' He was only half-kidding," 

Ross cited examples of what he called Tandy's "insensitivity to other 
people's feelings," such as dressing down an underling in the presence 
of a third party, and making "jocularly disparaging remarks about asso- 
ciates, again in their presence." He described an incident at a social 
gathering, where Tandy called his top financial adviser, Charles Tin- 
dall, "a dumb bookkeeper," in a voice heard around the room. 

But the other side of the coin, the article continued, was that Tandy 
was the guiding force behind "a giant machine for the creation of mil- 
lionaires, a project close to Charles Tandy's heart." Ross told of in- 
stances where Charles dug into his own pocket to help associates 
enlarge their estates, citing as an example his loaning $50,000 to a 
newly-hired executive to buy Tandy stock. After three stock splits, the 
shares were now worth more than $1 million. In 1971, Ross added, 
Tandy made similar loans totaling $1,760,000 to five newly created 
vice presidents. 

"Charles Tandy has far outdistanced the field," Ross wrote, "and he 
has done it with a chain of small stores that are rather unimpressive in 
appearance and often staffed by inexperienced sales people. His secret 
lies not in a lot of inventive new techniques, but in the speed, boldness, 
and scale of his operation. Tandy has expanded faster, advertised more, 



THE CB RADIO BUBBLE BURSTS 389 

and enforced more strenuous controls than any of the competition. 
Even when the Radio Shack stores were losing money a dozen years 
ago, he was putting in new outlets. By fiscal 1969, when the chain was 
grossing only $65 million, he amazed the industry by opening nearly 
200 new company-owned stores. He has continued opening new com- 
pany stores in the U.S. and Canada at an astounding rate of better than 
two each working day. No retail corporation, food chains aside, has 
spawned company-owned stores at such a clip." 

* ^ # 

Just before the publication of the Fortune article, however, Tandy 
would face the unpleasant task of publicly acknowledging that a three- 
month internal investigation by the company had uncovered several 
isolated instances -of^impropeFer-questionable^-tr-ansaetions by compa- 
ny employees in the United States and abroad over the preceding five- 
year period. 

The disclosure was made in a news release on November, 10, 1976, 
that stated, "While no pattern of illegal or improper conduct has been 
found, nominal gifts, merchandise discounts and cash payments were 
made in foreign countries where such practices are customary to expe- 
dite normal business operations, and gifts of merchandise were given to 
postal employees in a foreign country to facilitate the mailing of adver- 
tising at reduced rates." 

In addition, the news release declared, "Merchandise gifts were given 
to personnel in the tax assessor's office in Orange County, California, 
in connection with a claim for tax exemption, and political contribu- 
tions were made to one of those persons in his subsequent campaigns 
for election to the U.S. House of Representatives. The total value of the 
gifts, discounts, and payments amounted to $23,500 and the contribu- 
tions totaled less than $7,200." 

The news release added, "Tandy Corporation has terminated the mak- 
ing of such political gifts and contributions, and management has rec- 
ommended to the board of directors that it reiterate corporate policy in 
a formal resolution and written directive to all company employees, 
stating that all personnel are expected to comply with the law and to 
adhere to high ethical standards in Tandy's business operations and 
transactions." 

Subsequently, U.S. Rep. Andrew J. Hinshaw, Republican of Califor- 
nia, was convicted of accepting merchandise from a Tandy Corporation 
employee while serving as tax assessor of Orange County in 1972. Hin- 



390 THE CB RADIO BUBBLE BURSTS 

shaw, who was elected to Congress in 1976, received a sentence of one 
to 14 years. 

On November 16, 1976, an editorial in the Fort Worth Star-Telegram 
discussed the disclosures and commended Tandy Corporation for its 
handling of the matter. 

"In this age when many big businesses are viewed with suspicion, it 
is refreshing that Tandy Corp. initiated an extensive internal investiga- 
tion of its own international activities," the editorial said. "It is com- 
mendable that Tandy took action to find and correct questionable 
practices — to reveal rather than conceal. That kind of open, truthful ap- 
proach is fitting for a firm headquartered in Fort Worth, Texas." 

# * * 

But by now, Tandy had something else to worry about — a wide- 
spread fear that the CB radio boom might be coming to an end. His 
concerns had been mounting since the spring of 1976, when Tandy 
stock began plummeting upon publication of the company's nine- 
month figures that revealed a 180 percent increase in sales of citizens 
band radios. By late May, the stock had fallen some 20 percent from its 
high of 47 earlier in the year. 

On June 1, Tandy stock dropped VA to 35, and on June 5 it was 
off 3 more points and was the most active issue on the Big Board, 
which caused Clayton Reed, a financial columnist, to speculate in print, 
"You're wondering about CB manufacturers as a stock buy? You may 
be too late. True, sales and profits of companies like Hy-Gain Electron- 
ics, Tandy Corp. (Radio Shack), Pathcom Inc., Regency Electronics, 
Gladding Corp., E.F. Johnson Co. and Dynascan Corp. have doubled, 
even quadrupled recently, and could do so again. Wall Street, nonethe- 
less, remains skeptical. Price-earnings ratios generally are low. There 
are reasons beyond the 'fad' fears. General Electric and RCA, which 
abandoned the market years ago as unpromising, are jumping back in. 
And integrated circuitry is on the way — remember pocket calculators? 
All this will chop prices and could make the CB market die of its own 
weight." 

But it was a ruling by the Federal Communication Commission 
0FCO on Juh r 27 1976 that caused the real ^anic in the CB market- 
place. The FCC ruling authorized an increase in Citizen's Band radio 
channels from 23 to 40, effective January 1, 1977. That precipitated a 



THE CB RADIO BUBBLE BURSTS 391 

flood of dumping of 23-channel radio sets. In Lew Kornfeld's view, 
"This put a screeching halt to the two-year seller's market in CB 
radios." 

In his book, To Catch a Mouse, Kornfeld elaborated. "Pre-boom, CB 
had ambled along at 4-6 percent of Radio Shack's growing business. 
From 1972-1976, this 4 percent sleepyhead matured to a vast and 
treacherous monster. During several quarters of fiscal 1976 and 1977, it 
soared to over 20 percent of our sales and twice to as high as 28 per- 
cent. Then the public's passion for mobile chit-chat cooled at a pace 
and in a manner as predictable as what usually happens when torrid af- 
fairs with gadgets go sour." 

The day after the FCC announcement, Tandy stock was the second 
most=acti-vely~-traded-issue on the~New~York Stock Exchang^^falling- 
2 l A to close at 32/s. 

The following afternoon, Charles W. Tindall, Tandy's chief financial 
officer, told the Dow» Jones News Service that he knew of no reason for 
the stock's weakness and that he saw nothing but good news in the 
FCC's ruling permitting more CB radio channels. "It creates a whole 
new category of merchandise for us to market," Tindall contended. 
"Once the 40-channel unit is being marketed," he added, "the 23-chan- 
nel models will still be the most popular CB models, primarily because 
of the price difference which could amount to $30 to $40 a set." 

Wall Street took the statement with a grain of salt. 

As Tindall 's remarks went across the Dow- Jones wire, Tandy stock 
was trading at 307s, off 1V4, after hitting a low of 29 3 /s earlier in the 
day. 

CB manufacturers, Tandy included, began a frenzied rush to get their 
new 40-channel radios ready for FCC approval prior to January 1. 
Radio Shack was first in line at the FCC on September 10, 1976, when 
the agency began receiving 40-channel models for certification. The 
first five radios delivered to the FCC's laboratory for testing were from 
Radio Shack. 

In the meantime, prices on the existing 23-channel radios were begin- 
ning to slide. A Radio Shack advertisement in the New York Daily 
News in September announced a "price slash" from $109 to $99. 

Describing the situation to a group of securities analysts, Lew Korn- 
feld predicted there would be more price erosion. "But," he contended, 



392 THE CB RADIO BUBBLE BURSTS 

"we are better able to advertise and are in a better position to sell than 
our competition, meaning we can meet erosion vigorously and with 
great effect." 

There was no stemming the slide in the price of Tandy stock, 
however. 

On Wednesday, October 6, 1976, Tandy directors received notifica- 
tion of a special board meeting to be held on the following Wednesday 
morning, October 13, in Fort Worth. On Friday, October 8, there was 
unusually heavy trading in Tandy Corporation $35 October options on 
the American Stock Exchange. The heavy trading in Tandy options 
continued on Monday and Tuesday, October 11 and 12, and trading in 
Tandy common stock also was unusually heavy on the New York Stock 
Exchange on both days. Concerned over the abnormally high volumes, 
the governors of the American and New York Stock Exchanges halted 
trading in Tandy options and Tandy stock on Tuesday afternoon, Octo- 
ber 12, pending an announcement by the company. At the halt, Tandy 
stock was trading at 32 5 /s on the NYSE, up l A 9 amid rumors that 
the stock was being quoted off the floor at 36 to 39. 

Shortly before noon on October 13, the financial wires began circu- 
lating an announcement from Fort Worth that the Tandy board had ap- 
proved a plan granting stockholders the right to exchange their Tandy 
shares for a new issue of $40 subordinated debentures paying 10 per- 
cent annual interest. The offer was subject to a minimum of 500,000 
shares being tendered by the offering's expiration date of December 17, 
1976. If more than 1.5 million shares were offered for exchange, the 
company reserved the right to accept some or all of the excess shares or 
reduce the subscriptions on a pro rata basis. 

Tandy stock opened for trading on the New York Stock Exchange on 
Thursday morning, October 14, on a block of 150,400 shares at 34 7 /s, 
up 2V4 from the last sale on Tuesday afternoon, as investors jumped ea- 
gerly on the opportunity to acquire stock at a price in the mid-30s that 
could be exchanged for debentures worth $40 and that also paid 10 per- 
cent annual interest. Then, just before the close of trading on Thursday, 
October 14, the Securities and Exchange Commission announced that it 
had ordered an investigation of n ossible insider trading and/or manipu- 
lation in Tandy stock and Tandy options. 

Responding to the SEC announcement, Charles Tindall issued a state- 
ment that the company knew of no insider trading in its stock or op- 
tions, but was investigating the possibility of an information leak. 



THE CB RADIO BUBBLE BURSTS 393 

"We have no indication of insider trading by any directors or officers 
of the company," Tindall declared. "We polled employees at our Fort 
Worth headquarters and found none of us in Fort Worth bought any 
stock or options in October." He added that the company was polling its 
directors about their recent stock purchasing activity. 

"It looks like there could have possibly been a leak about the pending 
exchange offer in view of the heavy volume in Tandy October options. 
It does look suspect," Tindall conceded. He indicated a leak could have 
occurred during the preparation and printing of materials related to the 
exchange offer, pointing out that the materials had been delivered to the 
printer over the weekend. 

In an interview with Dallas Times Herald business writer Richard 

J^^^^ corporate 

secretary, said the company polled 14 of its 15 directors and found that 
none of them had bought Tandy October options. The remaining direc- 
tor was on a hunting trip and could not be reached. Winn emphasized 
that the term "insider trading" did not necessarily mean trading done by 
a company insider or on information given by a company insider. 

"It includes trading by anyone who gets inside information with or 
without the consent of the company or company employee," he said. 

Winn declined to speculate on a rumor that a relative of a Tandy ex- 
ecutive might have committed the leak by disclosing to social contacts 
that "good" news was imminent from the company. 

At the annual meeting in Fort Worth on November 12, Winn in- 
formed the shareholders that to his knowledge no Tandy officer or any- 
one in a management position had been involved in insider trading. 

Winn did report, however, that one Tandy employee and four former 
Tandy employees had given depositions to the SEC regarding option 
trades they had made just prior to the public announcement of the ex- 
change offer on October 13. 

The SEC subsequently filed complaints against six individuals for us- 
ing "non-public" information to benefit themselves in buying Tandy 
options. The profits they accrued, according to the SEC, ranged from 
$14 to $1,844. A federal court order later required five of the six to di- 
vest themselves of the profits generated by their trades and to pay nom- 
inal fines. 

On November 22, 1976, the SEC gave its approval to the debenture 
exchange offer, opening the gates to an ocean of shares that began 
flooding in for exchange. By the December 17 deadline, a total of 



394 THE CB RADIO BUBBLE BURSTS 

5,386,125 shares, or about 30 percent of the 17.9 million Tandy shares 
outstanding, had been tendered. The company agreed to accept 
2,450,975 shares for exchange, including all tenders of 50 shares or 
less. Tenders of more than 50 shares were accepted on a pro rata basis. 
The 2,450,975 shares were exchanged for $90,039,000 in debentures 
and were retired. 

The offer achieved two of the company's long-range goals — to re- 
duce the number of odd-lot holdings, thereby trimming the expense of 
furnishing annual reports and proxy statements to holders of less than 
50 shares, and to boost per share earnings by shrinking the amount of 
common stock outstanding. Charles Tandy called the reduction in the 
number of shares a plus for the company and for its stockholders. 

"At prices prevailing in recent years, which have been quite modest 
multiples of current earnings relative to historical norms," he told 
shareholders, u the purchase of shares with borrowed funds will enhance 
the future return on equity and earnings per share growth because the 
profit margins of the Company are in excess of the interest costs of the 
funds borrowed." 

Robert Metz, a New York Times financial writer, observed that the ex- 
change offer showed that Tandy management was so sure that its shares 
were undervalued that it was willing to go into debt to buy them up. 
"This is the second time in just over two years that Tandy has moved to 
reduce its equity," Metz noted. "Mr. Tandy's frustration is perhaps un- 
derstandable in terms of the past. As recently as 1972, Tandy shares 
traded at a price-earnings ratio of 35. At recent prices, the stock was 
trading at nine times the most-recently reported 12-month earnings." 

"The public was the real winner," Charles Tandy said of the exchange 
offer. "They came in like a flock of geese. It was very attractive to the 
little guy. When interest rates declined, investors scrambled to pick up 
the 10 percent paper." 

Tandy stock also was a winner. 

On December 20, it was the most active issue on the Big Board, gain- 
ing 7s to 38 3 /4 after the company announced the tendering of the 
5,386,125 shares. By late January of 1977, the stock climbed back to 
the mid-40 range amid good reviews from the investment community. 
Oppenheimer & Co., Inc., for example, announced it had increased its 
fiscal 1977 earnings per share estimate for Tandy Corporation to the 
$4.90 to $5.15 level because of the decrease in the number of shares 
outstanding and improvement in the company's long-term outlook. 



THE CB RADIO BUBBLE BURSTS 395 

"Since Tandy's exchange offer expired December 17, 1976, the stock 
has outperformed the market," Oppenheimer said. "Our December 2, 
1976. Tandy report was much too cautious in its opinion that the stock 
was fairly priced near term because: (a) the stock had run up after the 
announcement of the exchange offer and (b) we thought investors 
might negatively interpret indications that total demand for CB had 
peaked, unrelated to the 40-channel introduction. In retrospect, we 
should have stressed that the favorable longer term fundamentals out- 
weighed the near term uncertainties, which investors now seem to be 
recognizing," 

*h H 1 •$ 

On January 1, 1977, when the first 40-channel CB radios hit the mar- 
ketplace, Radio Shack sold the first set. 

The coup was pulled off by Chick L. Whitfield, the owner of a Radio 
Shack dealership in Tamuning, Guam, who made a special trip 
to Japan during December and picked up a supply of 40-channel radios. 
Whitfield then placed them on sale in his store at 12:01 a.m., January 1, 
Guam time, which was 1 3 hours ahead of the arrival of the new year on 
the mainland. 

On January 10, lime magazine carried a story with a photograph of a 
beaming Charles Tandy holding a 40-channel CB set in his hands. 

"The ubiquitous (more than 5,000 U.S. and Canadian outlets) Radio 
Shack claims 15 percent of the market in Citizens Band radio equip- 
ment," Time reported. "CB enthusiasts accounted for almost 25 percent 
of the chain's $742 million in revenues last year. Experts forecast sales 
this year of at least 10 million of the new CB models, and Radio Shack 
is set to take home to its parent, Tandy Corp. of Fort Worth, an increas- 
ing share of the industry's profits." 

The sales bonanza never materialized, however. 

Bernie Appel, who was then Radio Shack's vice president of mer- 
chandising, attested to this in a newspaper interview in which he admit- 
ted, "The 40-channel demand nas not oeen as signincaut as 
anticipated." Appel then added, "The current stock of 23-channel sets is 
being sold at extraordinary values." 

He wasn't exaggerating. Discounting on 23-channel sets soon began 
running rampant. Tandy saw a silver lining among the clouds, however. 

"Because we were selling to the ultimate consumer as well as to our 
dealers," he would later recall, "we were able to spot at an early date 
the growing glut of 23-channel equipment in the marketplace before 



396 THE CB RADIO BUBBLE BURSTS 

many of the independent CB manufacturers, and act accordingly. By 
moving aggressively with early price promotions, we were able not 
only to dispose of our remaining 23 -channel units relatively quickly at 
acceptable gross margins, but were also in a position to purchase and 
sell substantial quantities of distress close-out units of branded manu- 
facturers at very attractive prices and profit margins. In the process, we 
significantly increased our market visibility and store traffic which had 
a spill-over effect on the sales of other product lines." 

Tandy confided to John Roach, "I'd much rather buy the distressed 
merchandise and sell it myself than have my competitors selling against 
me at cut-rate prices." 

Lew Kornfeld estimated that Radio Shack bought upwards of a mil- 
lion close-outs and resold them profitably at discounts of up to 50 per- 
cent during fiscal 1977. 

Robert E. Keto, a longtime Radio Shack employee who became pres- 
ident and chief executive officer of InterTAN Inc., recalled accompany- 
ing Tandy to a speaking engagement before a group of analysts in 
Atlanta during this period. 

"Charles told the analysts that he was going to sell 1.6 million CBs," 
Keto said, "and one of the people in the room asked him how he knew 
he could sell that many." 

Tandy's rejoinder was, "Listen, wiseass, I've got them and I'll get rid 
of them. I just haven't decided the price yet." 

But the heavy markdowns on the 23-channel sets were taking their 
tollon the price of Tandy stock. On April 2G, 1977, after the announce- 
ment of flat third quarter earnings despite a 27 percent increase in sales, 
Tandy stock dropped \ l A to 32*/4. The same day, a Japanese CB radio 
manufacturer announced it was cutting its production by one-third be- 
cause of "demand uncertainty" in its major market, the United States. 
L.F. Rothschild & Co., a New York brokerage house, issued a report 
that spoke of "investor concern about CB radio price competition and 
its possible impact on Tandy's earnings growth." 

In mid-May, with the price of the stock still falling, Charles Tandy 
ordered full page ads taken out in key newspapers across the country 
that proclaimed in bold type: 

"On May 2, 1977, the Standard & Poor's Outlook published a list of 
New York Stock Exchange companies with 10 years of unbroken earn- 



THE CB RADIO BUBBLE BURSTS 397 

ings growth. Of more than 1,500 common stocks, only 90 survived the 
S&P computer screening. The 90 stocks were then ranked according to 
5-year growth rates. Guess which company was No. 1." 

Heading the list of 90 companies was Tandy Corporation with a 
five-year growth rate of 48 percent. 

Investors apparently weren't impressed. 

On June 7, Tandy dropped 4Vi points to 23 5 / 8 on the report that 
sales at Radio Shack stores in existence more than a year dropped 5 
percent during the month of May. Overall, Radio Shack sales rose only 
10 percent during the month. The news shocked Wall Street which had 
come to expect monthly sales increases from Radio Shack of 25 to 30 
percent. 

Garland Asher, who was th en Tandy Corporation's di recto r of fman- 
cial planning, said there was a simple explanation for the failure of May 
sales to show a larger gain. "We're in a transition period involving CB 
sets — a transition period expected to continue another two months. 
Sales are slow because so many 23-channel sets are on the market at 
low prices. We think sales of the new 40-channel sets will climb after 
the transition period." 

On June 8, Tandy retreated another VA points to 22/s, bringing its 
two-session plunge to 6. During the day, the stock traded at a new low 
of 21 for year, down more than 50 percent from its 1977 high of 
42 7 / 8 . 

On June 20, Charles Tandy moved to stem the tide with a tender offer 
to buy 3.5 million shares of Tandy stock at $29 per share. In announc- 
ing the offer, Garland Asher stated, "We're not a CB house. We're just 
a peddler... an electronics retailer. But the stock market has branded us 
a CB company. And because so many of the CB manufacturers are in 
trouble, they've brought our stock price down, too." 

Tandy stock jumped 3/sto 27 l A on news of the tender offer. A total 
of 5,426,000 shares was tendered by the July 12 expiration date, of 
which 3.5 million shares were accepted and retired. This reduced the 
number of shares outstanding to approximately 12 million. 

Charles Tandy rationalized the move in an interview in Forbes on 
July 15. "We're predicting earnings of $4.10 to $4.40 for our fiscal year 
that ended June 30," he said. "To finance the $29 offer price, we're 
paying prime rate for the money, or 6.5 percent. On $29, that interest 



398 THE CB RADIO BUBBLE BURSTS 

cost is about $2 pretax, or $1 a share after taxes. So, for $1 in interest 
cost we're buying shares that earn better than $4 and are spreading the 
gain over the other shares." 

Tandy Corporation's fiscal 1977 earnings totaled $4.17 per share on 
sales of $949.3 million. The figures showed, beyond a shadow of a 
doubt, that Radio Shack was a whole lot more than a CB radio purvey- 
or. But Wall Street wasn't listening. 

In Fort Worth, where there was an old saying, "When Tandy stock 
sneezes, Fort Worth catches cold," there was a lot of sadness among the 
tapewatchers in the brokerage house boardrooms. 

But among veteran stockbrokers like Franklin Halsell of Merrill 
Lynch's Fort Worth office, it was a case of history repeating itself one 
more time. Halsell had been watching the Tandy roller-coaster ride for 
too many years to throw in the towel now. One of his favorite expres- 
sions was, "Nobody ever got rich betting against Tandy" The time to 
buy, he told his customers, was now when the stock was a bargain. 

The investors who followed his advice wouldn't be sorry. 



Chapter 26 
The Birth of the TRS-80 



At 5 o'clock in the afternoon of a sunshiny day in June, 1975, John 
Roach pulled his car into a parking slot in front of the modest Tandy 
corporate headquarters on West 7th Street and made his way to his 
small^ — "~~~" 

Roach had served two years as vice president of distribution for 
Radio Shack. He had just returned from an extended out-of-town trip 
and dropped by his office to check his mail before going home. He ar- 
rived to find the gossip mill working overtime with the news that Radio 
Shack's vice president of manufacturing had just quit his job. Roach 
was not particularly surprised. 

"The guy had been hired for the job from the outside and had never 
really fit in," Roach would later recall. 

Now Lewis Kornfeld poked his head into Roach's office. "I'm glad I 
caught you," Kornfeld said. "Charles wants to see you first thing in the 
morning." 

Roach arrived at Tandy's office at 9 o'clock the following morning. 
He was still waiting when Tandy finally strolled in at a little after 10. 
He came right to the point. 

"I've got a new assignment for you," he told Roach. "I'm putting you 
in charge of manufacturing." 

Shaking his head incredulously as he recalled the incident, Roach 
said, "What you've got to realize is that I had never been in a manufac- 
turing facility in my life, especially not a Tandy facility, and I didn't 
know anything about cost accounting." 

At that time, Radio Shack owned and operated 17 factories in the 
United States, Canada, Japan, and South Korea which produced more 
than $80 million worth of consumer electronics products annually and 
employed nearly 3,000 people. The plants turned out about 20 to 25 

399 



400 THE BIRTH OF THE TRS-80 

percent of the products sold in the more than 2,500 Radio Shack retail 
outlets in the U.S. and Canada and the approximately 350 Tandy Inter- 
national Electronics stores in England, Belgium, Holland, Germany, 
and Australia. 

"But Charles had told me I was now in charge of manufacturing," 
Roach said, "so I got busy trying to do that." 

One of the things Roach concluded right off the bat was that the 
Radio Shack manufacturing operations lacked an in-house engineering 
capability. 

CCrrvl „ X* : „ A :« r, 1~ ~^~,, 1 + ~ » O U 

11IC1C wcic a icw ciigmccis muunu m a cuupic ui uui pianto, lvuauii 

said, "but we really didn't have much of an engineering group for an 
operation our size. The first thing I did was try to put them together in a 
sort of central group to handle the development of new products." One 
of the group's initial efforts was to develop a new line of calculators. 
"The calculator was kind of the latest thing then," Roach pointed out, 
"so we were trying to build calculators, among other things." 

At that time, there was no such thing as a cheap computer. The least 
expensive models cost $50,000 to $100,000. There were some mini- 
computers in the marketplace, but their cost was prohibitive, running 
into the hundreds of thousands of dollars. 

"Computers were then considered a rare species of creation, requiring 
an extremely cool and clean environment, special handlers, and large 
capitalization," Lew Kornfeld said. "The cost of making, selling and 
maintaining them was believed irreversibly high, and there was no 
large existing library of software. But two critical computer compo- 
nents, the cathode ray tube for displaying and the keyboard for manipu- 
lating data were already in 1975 at surprisingly affordable prices." 

Radio Shack already had employees on its payroll who enjoyed put- 
ting "computer parts jigsaw puzzles" together, Kornfeld continued, in- 
cluding some who "prowled the industry for things to add to Radio 
Shack's unique 'Parts Place' category of components." 

One of the most avid of these computer hobbyists was Donald H. 
French, who worked as a buyer for Bernie Appel in the Radio Shack 
merchandising department. French had become totally immersed in the 
fascinating new world of do-it-yourself computer-building, subscribing 
to all of the magazines devoted to the subject. He assembled working 
computer models from electronic kits already on the market. Soon he 



THE BIRTH OF THE TRS-80 401 

was engaged in a one-man crusade to convince the decision-makers in 
the company that Radio Shack should get into the computer kit busi- 
ness. His pitch now caught John Roach's attention. 

"He was getting all of these magazines talking about kitted computer 
parts," John Roach remembered. "I mean, it was a real hobbyist thing. 
French would talk to members of our engineering group about what he 
was reading in the magazines and what he was hearing from people on 
the grapevine. Pretty soon all of us were kind of talking about it, and 
we decided, well, maybe, we ought to build our own computer kit." 

The project made little progress until the spring of 1976, when Roach 
and several of his engineers took a trip to the Silicon Valley of northern 
California to visit some semiconductor manufacturers. "We were really 
looking primaril y for parts out of which we co uld mak e CB equipment 
and telephones," Roach said, "because we wanted to start manufactur- 
ing telephones and CB was still going strong. But we did, of course, 
still have a continuing interest in computer kits." 

One of the companies Roach and his engineers visited was National 
Semiconductor. There they were told that the person in charge of com- 
puter parts was not available, but that they could talk with one of his 
electronics engineers. 

"The guy they brought out to see us was really excited about comput- 
ers," Roach said. "One of the things he told us was that there was a 
computer store just down the street that we should be sure to visit. So, 
after we finished our business at National Semiconductor, we walked 
down the street to the computer store. This was one of the first comput- 
er stores in the country. Of course, it didn't have anything in it that 
looked like a computer. It just had some printed circuit boards, some 
bins with parts in them, and things like that. But, lo and behold, who 
did we find when we got there but the guy from National Semiconduc- 
tor who had been talking to us earlier. I kind of got the feeling that he 
was interested in going to work for us, so I suggested to the head of the 
Radio Shack engineering group that he get in touch with the guy." 

A month later, Roach asked the engineering group head, "Have you 
had that guy in for an interview yet?" The answer was negative. "My 
sense was that he really didn't want to have the guy in," Roach re- 
called. "So I told him, T want that guy in my office Saturday morning.' 
Saturday morning, the guy shows up, and he comes to work for us." 



402 THE BIRTH OF THE TRS-80 

The 24-year-old engineer was Steve Leininger. He would become, in 
John Roach's words, "a one-man band" in the development of the 
TRS-80 personal computer. 

The push to come up with a marketable, low-cost, small computer kit 
began in earnest. Roach assigned a design and engineering team 
that included Steve Leininger and Don French. Because of lack of 
space, the unit was initially housed in a former automobile salesroom. 

The task force began its labors amid mounting pressures for the 
development of a new product that would hopefully supplant the CB 
radio. In &ciCiiiiOii, ivauio oiiacK oatuy necucu a prouuct tnat woum 
showcase its technological capabilities as part of its ongoing effort to 
upgrade its image. 

"People still thought of us as 'Nagasaki Hardware,'" Lew Kornfeld 
explained. 

Then there was the pressure being applied by Charles Tandy, whose 
constant refrain to Kornfeld and Roach was, "Let's get off our asses 
and come up with some new products." 

The quest for the new computer kit continued into 1977. 

"The task force was trying to develop the mechanical designs, the 
cases, what we were going to do for a monitor, because monitors just 
weren't around as they are today," Roach recalled. "We seemed to be 
going back and forth, in a sort of hit»or-miss process, trying to come up 
with something that we thought we could sell, that might be an 
offering." 

Meanwhile, Bemie Appel suggested the idea of developing a fully- 
assembled small computer rather than a kit. 

"The problem was," Roach declared, "that there wasn't anybody else 
out there that was reputable at all that wanted anything to do with mak- 
ing a simple computer. In fact, the people who were really in the com- 
puter business thought it was a totally worthless idea, because you 
couldn't have all of the sophistication in a simple computer that they 
thought you had to have to sell anything." 

According to Roach, the critical decision to build a wired, complete 
system rather than a computer kit was made by Kornfeld and Bernie 
Appel. "It was an especially gutsy step," Roach said, "because the mar- 
ket was entirely kit up to that time." 

Recalling the decision, Bernie Appel said, "The TRS-80 was not a 
long range plan, a 'let's go after a market' type thing. It was an idea 
that a couple of our people thought about. It was talked about in the in- 



THE BIRTH OF THE TRS-80 403 

dustry. It was brought to me by one of my buyers. I looked at it and I 
said, 'If you're gonna make a $500 to $600 item, don't sell it as a kit. 
Make it a wired unit that works.' Lew Kornfeld concurred." 

With their hopes finally realized, Leininger and French and the other 
members of the development team went back to work with renewed en- 
thusiasm. Periodically, Leininger and French would come over to 
Roach's office to show him the latest fruits of their labors. 

"They'd say, 'Well, here's what we can do,'" Roach recounted. "But 
I was mostly worried about price. Radio Shack had never sold anything 
costing over $500 in its life. I was scared to death that the public 
wouldn't buy the product, no matter how great it was, if it was priced 
over $500. So I would send them back and say, This is too expensive.' 
'We can't get there with this.' 'Yeah, we can accept this idea and that 
idea.' 'That makes a lot of sense, but...'" 

Slowly the negatives were whittled away, costs reduced, designs 
scrapped, and new ones drafted. Selection of a microprocessor, the 
heart of the microcomputer, was a key decision. Imbedded on a tiny sil- 
icon chip, the microprocessor contains the elements that enable the 
computer to handle data, make calculations, carry out stored instruc- 
tions and perform the other functions it is designed to do. After a 
lengthy search, a Z-80 microprocessor manufactured by Zilog, a semi- 
conductor company in the Silicon Valley, was chosen. 

Another cost-saving move was a decision to go into the marketplace 
for a monitor rather than tool up and produce one internally. 

"A number of manufacturers of video monitors were offered orders in 
lots of 1,000," Lew Kornfeld reported, "but only RCA showed any in- 
terest. RCA not only agreed to supply us with the monitors, 12-inch 
black and white TV receivers without tuner, speaker and certain other 
circuitry, but the silver gray case that was included served us as a style 
and color guide for the rest of the system. The computer itself, consist- 
ing of the Zilog Z-80 and support parts, was located in a separate key- 
board cabinet." 

The TRS-80 was developed for less than $150,000, including tooling 
costs," John Roach revealed. "That was a small investment for the sig- 
nificant role that computer had in spawning a new industry. But the 
low-cost development was necessary for such a high risk product in 
what was then an uncertain market. For example, the black and white 
monitor sourced from RCA was a discontinued television cabinet avail- 



404 THE BIRTH OF THE TRS-80 

able in 'Mercedes Gray' or 'Woodgraim' We took what was available 
to save costs. This explains our often-cussed gray color in later years." 

About the silver gray color, Lew Kornfeld added, "I strongly ap- 
proved its selection on the principle that we didn't want something as 
serious as a computer to go to work in racing stripes. I felt it had to 
look sober, dignified, and impressive." 

The handmade model of what was to become the TRS-80 was finally 
assembled in January of 1977. "It had a case and a keyboard and had 
some reasonable resemblance to what we initially came out with," 
Roach recalled. "On the breadboard, meaning a hand-wired thing, un- 
derneath the table and under a black cloth, we had the guts of the com- 
puter. We set it up in what was the only conference room in the 
company at the time, on the second floor of the building on West 7th 
Street. Lew Kornfeld looked at it. He was excited about it." 

Recalling the development of the handmade model, Kornfeld noted, 
"Whenever I'd see the breadboard, I'd say, 'We'll order it the day it can 
play chess with me and nobody from engineering has to hold the wires 
together or tell me, 'honest, boss, it was working just a minute ago, 
but...' Then came the day it would play chess, and, finally, the day our 
little group said there would be a working TRS-80 prototype ready to 
be approved for production early that afternoon." 

It was now time to secure the boss's blessings on the project. Korn- 
feld recalled the historic day in the spring of 1977 that Charles Tandy 
was first shown the prototype of the machine that would blaze the way 
for the mass-marketing of personal computers. 

"As I crossed over the windowed landing separating my grungy of- 
fice from our grungy, windowless conference room," Kornfeld recount- 
ed, "I looked out and saw Tandy getting into his black Continental." 

Kornfeld charged down the flight of stairs to the street level and 
bolted out the front door in time to intercept Tandy as he was backing 
his Lincoln out of his parking slot. 

"Charles," Kornfeld panted, "I need you to come upstairs to bless a 
new project. It might be a real, exclusive winner." 

"What is it?" 

"A computer, a little desktop computer." 

"A computer!" Tandy blared. "Who needs a computer?" 

Kornfeld admitted that no one really knew if a market existed for a 
small computer. 



THE BIRTH OF THE TRS-80 405 

"I told him that there were no known customers asking for one; that it 
was virtually impossible to identify buyers; that we had no opening or 
quantity set beyond what would be needed to buy parts economically, 
but that we were considering at least 1,000; that all we had was a very 
rough idea of parts and labor costs, so a selling price had yet to be 
firmed up. But I guaranteed not to give away gross margin to prove any 
points." 

As he and Tandy walked up the stairs to the conference room, Korn- 
feld offered one final admission. 

"Charles," he said, "this is the first product I've ever been involved 
with that has so many fundamental unknowns. But there is also one 
known. If the project does succeed, it would be like inheriting a Boeing 
747 and, having decided to keep it, you're going to need spare parts, 
aviators, ground crew, hangars, extra long landing strips, and God 
knows what else, including lots of money." 

When Tandy and Kornfeld entered the conference room, they found 
an assemblage on hand that included John Roach and Bernie AppeL 
Tandy seated himself at the head of the large oblong table that domina- 
ted the room. 

The presentation began. 

"First there was a kind of sales pitch by the technical people and the 
merchandising people," Roach recalled. "Through it all, Charles was 
puffing on his cigar and just kind of shaking his head. Typically, he 
didn't get involved in merchandise. He was not technical at all." 

When the demonstration ended, there was a moment of silence. All 
eyes were riveted on Tandy. The tension in the air was excruciating. 
Then Tandy blew a cloud of smoke at the ceiling. 

"It's interesting," he said. "It's different." He looked around the 
room. "How many of these do you think we should buy?" 

Numbers were thrown out and Lew Kornfeld reiterated the 1,000-unit 
minimum he had mentioned earlier. 

"Okay," Tandy said, "let's go with 1,000 machines. If we can't sell 
them, we can always use them in the stores for inventory." 

As Tandy left the room, there was much handshaking and backslap- 
ping. "Everybody was happy," Roach said, "because now the develop- 
ment team knew it was going to get to build a computer." 

A few days later, Roach walked into Kornfeld's office and told him, 
"Lew, we can't build 1,000 machines. In order to really meet our cost 



406 THE BIRTH OF THE TRS-80 

targets and get tooling and everything that we need to do, we're going 
to have to build 3,000 machines." 

"That's fine/' Kornfeld responded. "Let's build 3,000." 

In his book, To Catch A Mouse, Kornfeld later wrote: "Radio Shack 
certainly hadn't determined the size of a possible microcomputer mar- 
ket when it put the TRS-80 into production in Fort Worth. The first 
production plan was for only 1,000 computers. The second production 
plan was for 3,000 computers. Neither the fiscal 1977 ad budget nor the 
fiscal year budget for the year beginning July 1, 1977 included funds 
ueuicateu to promoting iuc r^. 

"But by September l, 1977, when we saw everything was coming up 
roses, we hired new hands, rented new spaces, changed the rules for 
permissible dollar inventory levels in the stores, reserved a large ad a 
month for the TRS-80 in the monthly flyer, and included it in newspa- 
per ads and inserts." 

It was Kornfeld who named the product the TRS-80— "T" for Tandy 
and "RS" for Radio Shack. The "80" came from the Z-80 Zilog micro- 
processor. 

"I decided to use Radio Shack instead of Micronta, our usual brand 
for serious technical items," Kornfeld said, "because here was a unique 
chance to make Radio Shack a manufacturing name in addition to its 
fame as a retailer." 

Now began a race against time to bring the TRS-80 to market. 

"The pressure of the upcoming electronics shows and the awareness 
that Commodore International and Apple were also about to bring out 
microcomputers, and the difficulty of keeping important secrets secret, 
convinced us we needed a firm kickoff date," Kornfeld disclosed. 

The Warwick Hotel in New York was chosen as the site and August 
3, 1977 as the date of the unveiling. But by early June, the TRS-80 pro- 
duction line was still dormant. Kornfeld, who had been promised he 
would have 50 units in hand by the beginning of June, was beginning to 
feel like a general anxiously awaiting the arrival of his missing army as 
D-Day approached. 

Meantime, a decision was made to market the TRS-80 at a price of 
$599.95. Kornfeld described the reasoning behind the $599.95 price 
tag. 

"Discovering that our price margin would not be torpedoed at 
$599.95 and on being assured by our factory that cost reduction would 



THE BIRTH OF THE TRS-80 407 

result from mass production and after tool cost write-off, I froze the 
price at $599.95 against all temptation, even after a savvy computer 
parts retailer reckoned that $1,000 to $1,200 was not only attainable but 
reasonable in view of the scarcity of competition. But on or near the 
market in modest quantity were the Commodore 'PET'; Apple II, 
which had color but lacked a video display and was more money; the 
Compucolor 8001 at $2,750, 'America's lowest-priced personal com- 
puter system with color vector graphics'; Processor Technology's Sol 
20, advertised as The Small Computer' for $995 kit and $1,495 fully 
wired (less monitor); and a few others. Now did not seem to be the time 
to play 'Bet the Bank!' The one hundred dollars or more per system we 
might make if the business was out there might just be enough to kill 
the product. Why risk killing a product with so much going for it in 
technology, prestige and price? 

"Note: Our median sales ticket at the time was a skimpy $29.95. 

"In addition, whenever anyone produced a rabbit out of his hat in 
consumer electronics, 10 other companies would display their version 
of the bunny at the next industry show, and two would claim to have 
fathered it. Hence the rest of my rationale for $599.95. Hopefully, our 
modest price would help discourage the loft operator and low-ball im- 
porter from taking a ride on the high tech bandwagon for a few years." 

Roach revealed an interesting sidelight to the TRS-80 story involving 
William H. Gates, who co-founded Microsoft Corporation in 1975 at 
the age of 19 and went on to become a multi-billionaire after Microsoft 
became the number one developer of computer software. 

"Our original BASIC interpreter was written in-house, as there was 
not much else available," Roach reminisced on the 10th anniversary 
of the introduction of the TRS-80. "The debugging of that first BASIC 
almost led to a delay in the introduction, but at 3 o'clock one 
morning — just in time — that last 'bug' was found. 

"As interest and momentum in the fledgling microcomputer industry 
began to increase, we invited Bill Gates to offer his Microsoft BASIC 
as Level II BASIC for the TRS-80. Microsoft was just a handful of 
people in those days led by Gates' dreams. The boyish Gates made an 
urgent trip to Fort Worth during the week of a family member's wed- 
ding to negotiate and 'sell' his BASIC. His BASIC was great, as was 
his grasp of software; but his negotiating was a little less than confi- 
dent. With his one-and-a-half page agreement and a little negotiating, 



408 THE BIRTH OF THE TRS-80 

we agreed on a one-time charge. Later, when we introduced the Model 
III, Gates suggested that, perhaps, Microsoft should also receive a roy- 
alty or some additional compensation. It did. Bill and Microsoft have 
been among our longest term vendors in the microcomputer area and 
good friends to the company." 

The TRS-80 was formally introduced at a press conference at the 
Warwick Hotel in New York on August 3, 1977, to the accompaniment 
of popping flashbulbs and radio and television coverage. It was greeted 
in the media as a breakthrough product as far as price was concerned. 

One of the most comprehensive articles appear eu in Electronics 
magazine. 

"The world's largest retailer of electronics, the Radio Shack chain of 
more than 6,000 stores and outlets, has just entered the consumer-com- 
puter market," the article declared. "And it has done so not only with a 
microcompxiter system that it designed itself, but with one that is the 
market's price leader — $599.95 buys a 12-inch cathode-ray-tube dis- 
play, keyboard, and cassette tape recorder. 

"Called the TRS-80, the microcomputer system is built around Zilog 
Corp.'s high-performance Z-80 microprocessor and comes with 4,096 
bytes each of random-access and read-only memory. It is the easiest to 
set up and use of any microcomputer system now available. This is be- 
cause its BASIC assembler is already in ROM and does not need to be 
loaded into memory. All that is needed is for the separate units to be 
plugged together. Turned on, the computer system responds by saying 
'Ready'. The user then types in simple BASIC language statements ei- 
ther to create programs or to load the blackjack or backgammon pro- 
grams supplied in the cassette that comes with the system." 

The article stressed that the designers of the new computer had con- 
centrated on keeping the machine simple and easy to operate. Another 
prerequisite was flexibility. 

"The TRS-80 is designed with Radio Shack's own 48-line bus that al- 
lows peripherals to be daisy-chained together. You don't need an ex- 
pander to add on peripherals. Each one simply plugs into the back of 
any other peripheral," the article quoted Don French, who was now the 
TRS-80 merchandising manager. "We designed our own bus so that 
each peripheral does its own interfacing, unlike the S-100 (hobbyists') 
bus, which has the central processing unit doing the work." 

The article added: 

"Radio Shack will make details of the bus available to enable users to 
interface peripherals of other makers easily. French also says he chose 



THE BIRTH OF THE TRS-80 409 

the Z-80 for its speed; its powerful instructions, which allow the 
BASIC interpreter to fit into only 4-K bits of ROM; and its single 5- 
volt supply requirement. 

"Radio Shack is also planning to offer its own peripherals. One is a 
general-purpose expansion box that can be outfitted with additional 
memory — up to 62 kilobytes of RAM, which, with 12 kilobytes of 
additional internal ROM, will support extended BASIC and provide 
such capabilities as graphics, double-precision calculation, and analog 
interfacing. 

"Among other peripheral products to be available are a miniature- 
floppy disk drive and a dot-matrix impact printer. The drive, which will 
store 90 kilobytes in a single-sided, single-density format, will be 
priced below t hose av a ilable o n t oday's market. " 



An article in the Fort Worth Star-Telegram said of the TRS-80, "It 
appears to be a cassette recorder, a 12-inch television set and a type- 
writer keyboard flanked by gray cords. The cassett| recorder is for pro- 
gram storage. A 300-page manual is offered for those who wish to do 
their own programming. But for others who have a tough time even us- 
ing an adding machine, Radio Shack is offering some already prepared 
programs on cassette tape. These include programs for playing black- 
jack and backgammon, teaching multiplication and subtraction, and 
storing menus and conversion tables." 

The article concluded: "The TRS-80 may not look like a computer, 
but it sure is beginning to act like one." 

The public relations fallout from the introduction of the TRS-80 ex- 
ceeded all expectations. Charles Tandy alluded to this in a speech at 
M.LT. in 1978. 

"We got $50 million worth of free publicity out of it," he reported. 

John Roach recalled that the public relations aspects of the TRS-80 
figured in Tandy's thinking when he initially approved putting the 
product into production. 

"When he gave us the go-ahead to produce the 1,000 units, he told 
us, 'It's got to be a good publicity deal, 5 " Roach said. 

No one anticipated the extraordinary success the TRS-80 achieved, 
Roach declared. He told of a conversation he had with Tandy about a 
month after the TRS-80's introduction. 

"Charles had been invited to make a speech in Dallas and he asked 
me to go with him," Roach related. "He said, 'You've got to come with 
me. I don't know anything about computers. I'll make a speech and 
then you show them the machine and talk about it.'" 



410 THE BIRTH OF THE TRS-80 

On the drive to Dallas, Roach told Tandy, "With the phone calls 
we're getting, with the publicity we're getting, with the amount of or- 
ders coming in, I think we've really got something hot, even if we 
don't have anything to ship." 

Tandy responded, "Well, I'm not sure. I hope you're right." 

"He was still, even at that point, not overly confident," Roach went 
on. "None of us knew that we had something that was going to be as 
significant as it was or that a new industry was starting that was going 
to be as important as it turned out to be. We didn't have any great vi- 
sionary among us who said, fc God, we're fixing to do something that's 
going to be really significant.' We thought we had a good product that 
was of interest to the traditional Radio Shack customer, and at $600 we 
hoped we could sell it." 

The TRS-80 was an instantaneous hit, but when the orders starting 
pouring in there was no way to keep up with the demand. 

"Our first team of seven builders and designers had only grown to 
15," Lew Kornfeld noted, "and the first off-the-line TRS-80 was a 
breech delivery on September 15. They came out one-a-day until Sep- 
tember 20, when 21 computers got built. The month's grand total was a 
measly 130. October was better by a factor of three times. Back orders 
were growing like crazy — a new experience for Radio Shack since its 
turbulent mail order days. Now, just to get on our waiting list, you had 
to ante up a 10 percent deposit as a token of your sincere intention to 
become an owner. By November, we were oversold and flooded with 
inquiries. Orders were being filled on a first-come, first-served basis, 
and we were warning people that to give a TRS-80 for Christmas 
would take fast action," 

Although the TRS-80 was an "immediate success," Roach reported, 
"market awareness was very low. So, in the spring of 1978, we began a 
series of barnstorming meetings around the country to build awareness. 
We set up 30 to 50 computers in a hotel and invited the media, the fi- 
nancial community and the public to see and use a microcomputer. This 
activity played a vital role in the rapid development of the market." 

Kornfeld elaborated on the barnstorming project in his book. 
"Few ^eople in the entire country had ever seen or touched a comput- 
er, much less thought of owning or using one, not at $599.95, not at any 
price. So we decided to take the TRS-80 and a cadre of handlers and 
talkers on the road with a series of shows that began in March, 1978. 
By then, six months after the assembly line had begun to churn in ear- 



THE BIRTH OF THE TRS-80 411 

nest, our computer manufacturing employees had grown from 7 to 385, 
the factory size from 15,000 to 85,000 square feet, and the back orders 
from a pile to a mountain. 

'These traveling shows, nicknamed 'computer blitzes, ' were first 
planned for the 50 largest domestic SMSA markets. We began with 
Phoenix which, though only No. 28 in metro ranking, had the advan- 
tage of being a good Radio Shack city. It was near enough for an out- 
of-town rehearsal and blessed with warm weather, so snow couldn't 
postpone the show. The problem of simultaneously trying to sell TRS- 
80s in Phoenix while the waiting list was growing in Fort Worth was 
solved by filling all the Phoenix back orders first and planting enough 
on the local shelves to fill all new Phoenix orders resulting from the 
blitz. Cit y by ci t y, we bli tzed , fi lle d , s t o c k ed and so ld on a l ocal b asis , 
while the national program continued on its 'backorderly' way. 

"The blitz budget was based on an arbitrary per-store basis: $600 per 
store in Phoenix-size cities to $1,000 per store in the biggest markets. 
Phoenix had 36 company stores in March, 1978, so about $21,600 was 
spent there and in other similar-size cities on media, travel and enter- 
tainment. 

"Personal invitations were sent to 5,000 customers selected on a basis 
of recency and frequency, plus a stack of recent mail inquiries. 

"Newspaper, TV and radio ads and direct mail literature were created. 
The kickoff newspaper ad was % of a page. 

"A press kit was prepared that included a TRS-80 brochure and cata- 
log, the Tandy annual report and one of Radio Shack's famous free 
5-cell flashlights. 

"We blitzed once in March, 1978, four times in April, six times in 
May, seven times in June, eight times in July, seven times in August. 
By November, we had blitzed 101 times (up from the original plan of 
50) which, at two days per blitz, equaled 202 show days." 

Hundreds of thousands of people, most of whom had never even seen 
a computer before, flocked to the shows to take advantage of the oppor- 
tunity of actually using one of the demonstration machines. Nation- 
wide, the $2.1 million blitz resulted in thousands of TRS-80 sales. 
Kornfeld estimated that more than 3,100 company-owned Radio Shack 
stores benefited directly from the blitz by being located in or close to 
cities where the shows were held. 

"Before 1978 was over," Kornfeld reported, "there wasn't a store in 
our entire system that hadn't sold a TRS-80." 



412 THE BIRTH OF THE TRS-80 

Kornfeld recalled an experience that illustrated the popularity of the 
TRS-80. He was on a buying trip in Japan in October, 1977, when the 
phone rang in his room at the Royal Hotel in Okasaka at 7 a.m. 

"This is Mr. Z in Florida and I have a complaint about your 
computer." 

"What's your problem?" 

"I need one this week." 

"We're filling orders on a first-come, first-served basis." 

"I know that, but I'm about two months down on your list." 

"So you'll get it in two months." 

"That's not good enough." 

"Look, Mr. Z, I really do appreciate your interest in our merchandise, 
so I'm going to give you the name and phone number of my executive 
vice president in Fort Worth. Call him and see if he's a softer touch 
than I am." 

Three days later, Kornfeld was in the Hotel Okura in Tokyo when his 
phone rang again at 7 o'clock in the morning. It was Mr. Z again. 

"Didn't you call that guy in Texas?" Kornfeld asked. 

"I did. And he told me the same thing you did... to wait." 

"I can't believe you'd phone me here in Japan just to tell me the ob- 
vious. Is there more?" 

There was, Kornfeld reported. "The guy said he was going to sue us. 
On what grounds, I couldn't imagine." 

Very few products, if any, were ever received with such enthusiasm 
by the buying public that would-be customers were even threatening 
lawsuits to move up on the waiting list. 



Chapter 27 

"The Biggest Name in 
Little Computers" 



The age of the personal computer dawned, and PCs suddenly were a 
hot new item in the mass media. 

Ti m e ma gaz ine was o ne of the first nationa l p ublications to g et into 
the act with an article on September 5, 1977, under the headline, "Plug- 
ging in Everyman." A subhead spoke of "Cheap computers that balance 
checkbooks and water lawns." 

The article told about Michael Mastrangelo, a Manhattan audiovisual 
consultant, who had a new "servant" in his home, an $11,000 custom- 
built computer that kept the temperature and humidity at desired levels, 
put his favorite music on the stereo as he pulled his car into the drive- 
way, phoned him at the office in case of fire or burglary, awakened him 
in the morning, briefed him on his day's business appointments, re- 
minded him that his car needed an oil change, watered the lawn, and 
cooked his dinner. 

Several other "computer addicts" were featured in the article, includ- 
ing Robert Goodyear, a Framingham, Massachusetts, physicist, who 
used his machine to type and edit his personal correspondence; Joseph 
J. Sanger, a Manhattan physician, who cross-indexed his medical jour- 
nals to provide him with instant, tailor-made refresher courses on any 
disease he asked for; Irving Osser, a ham radio operator in Beverly 
Hills, who maintained a log of the people he talked to on his radio; and 
Robert Phillips of Chicago, who had terminals in every room of his 
apartment, using them to dim and brighten his lights, tune in his stereo, 
turn his television on and off, and open and close his drapes. 

The article quoted a forecast from Byron Kirkwood, a Dallas micro- 
computer retailer: "Some day soon every home will have a computer. It 
will be as standard as a toilet." 



413 



414 "THE BIGGEST NAME IN LITTLE COMPUTERS" 

On November 21, 1977, a lengthy article on microcomputers in U.S. 
News & World Report was illustrated by a photograph of a man in his 
shirtsleeves, coffee cup at his side, seated in front of a TRS-80 in the 
kitchen of his home, while his smiling spouse prepared dinner. The cap- 
tion underneath the photo read, "Radio Shack's new microcomputer, 
used here to help manage family finances, is a hot seller at just under 
$600." The headline over the article asked the rhetorical question, 
"Soon: A Computer In Every Home?" 

U.S. News was as ardent as Time over the outlook for the PC. "Com- 
puters that can fit on a corner of a desk are showing up in fast-growing 
numbers of small shops, professional offices, even living rooms," the 
magazine enthused. "As they do, a major new branch of the electronics 
industry — microcomputers — is being created almost overnight, with 
potential markets measured in the billions of dollars per year. Like its 
big brother in big business, the small computer can keep track of pay- 
rolls, inventories and investment portfolios. But the microcomputer ver- 
sion is also compact enough to be used in the home to maintain 
Christmas card lists, family budgets or collections of favorite recipes. 

"Possible applications of the desk-top computer seem almost limit- 
less. New ideas flow in a flood from crowded conferences on personal 
computing being held around the country. Computer clubs are sprouting 
all over. A dozen or so magazines on personal computing have been 
started in the past few months. About 25,000 microcomputers will be 
sold this year and four times that number next year at prices ranging 
from $275 to $5,000. Frank J. Burge of Regis McKenna, Inc., a com- 
puter public relations firm in Palo Alto, Calif., predicts that by 1985 the 
market for microcomputers for use in the home will exceed $1.5 billion 
a year, and the market for microcomputers adaptable for small business 
applications an additional $800 million. 

"The production of microcomputers was dominated by small firms, 
selling mainly through electronics shops, until the fall of 1977. Now 
large manufacturers such as RCA, Tandy, and others have moved into 
the field. The Radio Shack chain began selling a computing system this 
fall for a little less than $600. Radio Shack says its shops are swamped 

The Albany, Oregon, Democrat-Herald, which featured the TRS-80 
in an article on PCs, quoted the following forecast from Curtis Cook, 
the acting chairman of the computer science department at Oregon 



"THE BIGGEST NAME IN LITTLE COMPUTERS" 415 

State University: "The average American is on the verge of having the 
computer enter his home. The computer is going to come in just like 
the calculator did. It won't be as fast, but it will come. The reason is 
because they can manufacture them so cheap. They can manufacture a 
whole bunch of small chips — the same thing as your small calculator." 

Dick Heiser, who had opened the nation's first retail computer store 
in Santa Monica, California in 1975, was quoted in The Los Angeles 
Herald Examiner as predicting that in 10 years, "50 million Americans 
are going to own two computers each — one at home and one at work." 

"The lid is off," Theodore Nelson, author of a book on computers, 
declared. "There is going to be an avalanche in computers as there was 
with hi-fi, calculators and CB radios." 

By the end of October, 1977 , only three months after the advent of 
the TRS-80, more than 37,000 inquiries had been received about the 
new product, with most of the queries coming from small businesses, 
Charles Tandy reported. "The orders are flocking in," Tandy enthused 
to Larry Roquemore, a Star-Telegram business writer. "We smell some- 
thing big here." 

The response to the new product was so heavy, Tandy revealed, that 
one individual placed an order for 10,000 machines. "But we had to 
quash the deal," he said, "when we found out that the guy dealt in 
mail-order electronics kits." 

Wall Street also appeared appreciative of the long-term benefits that 
the TRS-80 promised. 

On August 29, 1977, the Wall Street Transcript published the con- 
tents of a report by Thomas H. Mack and Margo N. Alexander of 
Mitchell, Hutchins, Inc., that claimed the significance of the introduc- 
tion of the TRS-80 was that Radio Shack, a national retail chain, made 
the commitment to build and sell an inexpensive home computer. This 
indicated that the economic feasibility of a $600 simple computer was 
here. 

"Mack and Alexander think Tandy will be another major beneficiary 
of this potentially explosive home computer market," the Wall Street 
Transcript maintained. "They believe Tandy's extensive in-place distri- 
bution network provides cost savings and should allow the company to 
quickly build up expertise and related product efficiencies. The analysts 
note that some critics of Tandy have suggested that consumers will not 
trade up at Radio Shack, because products there are not perceived to be 



416 "THE BIGGEST NAME IN LITTLE COMPUTERS" 

of high quality. Consumer acceptance of this new $600 sophisticated 
product, they say, will test the validity of this reservation." 

Meantime, TRS-80 sales continued to boom, overcoming such set- 
backs as a severe production backlog that was encountered during the 
spring of 1978. Lew Komfeld recalled how the immediate acceptance 
of the TRS-80 by the buying public reminded him of the beginning of 
the CB radio boom. 

'The memories of the CB were fresh on my mind when Radio Shack 
entered the PC marketplace," he said. "We were back in the driver's 
seat again, but there was a glorious difference between the fizzled CB 
and the emergent PC booms. The TRS-80 and its ilk were serious prod- 
ucts, designed not for chit-chat, not for useful short range communica- 
tions, but as permanent parts of the permanent processes of educational 
and professional life. 

"The PC could handle the storage, retrieval and manipulation of es- 
sential data; the performance of repetitive tasks such as payrolls, mail- 
ing list labels, processing receipts and invoices. The little computer was 
faster, cheaper and more accurate than most 'by hand' procedures. But, 
once built into one's life, it needed to remain 'up and running'; service 
had to be almost instantaneous; fixes had to stay fixed; bugs had to stay 
debugged. The utility of a computer was dependent upon the software 
developed for it, and it was not enough to talk software. It, too, had to 
be ready to 'up and run."' 

Kornfeld exhibited a prescience in a commentary about the TRS-80 
he wrote for the 1977 Tandy Annual Report. "The market we foresee," 
he opined, "is businesses, schools, services and hobbyists. The market 
others apparently foresee is 'in-home' — computers used for recipes, 
income tax, games, etc. We think home use is a later generation 
happening." 

More than a decade later, the "computer in every home" forecast re- 
mained, like former President Herbert Hoover's 1932 campaign predic- 
tion of "a chicken in every pot," an unfulfilled promise. 

The success of the TRS-80 was the number one topic at the annual 
meeting in Fort Worth on November 11, 1977, attended by the largest 
number of shareholders in company history who gathered on the still 
unfinished seventh floor of One Tandy Center. An upbeat Charles 
Tandy reported that 80 to 100 computers a day were currently being 
produced. "We have a tremendous backlog/' he exulted. 

"Last year was the best year ever for the company," Tandy told the 
shareholders in his opening remarks. "Our cash flow is generating more 



'THE BIGGEST NAME IN LITTLE COMPUTERS" 41 7 

money than we're spending for expansion." Radio Shack, he said, 
planned to add 1,000 new stores in fiscal 1978, down slightly from the 
1,200 new outlets opened in fiscal 1977. The reason for the decrease, 
he explained, was the difficulty being experienced in finding suitable 
and affordable locations. 

"But we've got more outlets than any company in the world," he said 
proudly, "That's a far cry from the 9 outlets we had just 14 years ago." 

At the close of the meeting, Tandy called on Jim West for a few 
words. The peppery vice chairman received an ovation from the audi- 
ence when he concluded his remarks, "Our stock is the best on the mar- 
ket. Over the years, I've received advice to sell it, but I've never sold a 
share of my Tandy stock. I've only added to it." 

On that high note, a broadl y-gri nnin g Tand y adj ourned the meetin g. 
It would be the last annual meeting over which Charles Tandy would 
preside. 

* # # 

Despite Jim West's optimistic appraisal, Tandy stock was deep in the 
doldrums, along with the rest of the stock market, at the time of the an- 
nual meeting. The Dow- Jones industrial average had dropped almost 20 
percent during the first 10 months of 1977, and New York Times busi- 
ness columnist Robert Metz took note of what was happening in his 
column of October 24 about undervalued stocks. The column contained 
a nice plug for Tandy 

"When stock prices are falling, investors naturally regard the market 
with apprehension, few having the fortitude to buy for fear of continued 
selling," Metz wrote. "However, there are those who see down markets 
as offering an opportunity to buy stocks at relatively low prices. Some 
believe that there are hundreds of undervalued stocks, now that price 
multiples of 4 to 5 times anticipated earnings are commonplace. 

"Raymond Frankel, president of the Technological Investors Manage- 
ment Corporation, which manages some $20 million, primarily for indi- 
vidual investors, asserts that this year's market weakness means that 
dozens of growing companies are selling at price-earnings multiples 
rarely available. Mr. Frankel conceded that many stocks he now fa- 
vored had fallen on hard times. Some of his current choices are selling 
at multiples that he says do not reflect their growth potential for the 
years immediately ahead. 

"For example, Mr. Frankel favors the Tandy Corporation, the shares 
of which fell out of bed in reaction to the collapse in the Citizen's Band 
radio market. Mr. Frankel said that CB radios represented a maximum 



418 "THE BIGGEST NAME IN LITTLE COMPUTERS" 

of 25 percent of Tandy's volume in the spring of 1976 and had dropped 
to half that level a year later when the bottom fell out of the CB market. 
"Tandy shares, meanwhile, dropped from a peak of ATA — when it 
was obviously overpriced, according to Mr. Frankel — to a low of 21. 
Meanwhile, Tandy earnings increased from $3.55 in the fiscal year end- 
ed June 30, 1976 to $4.34 for the just-completed fiscal year. At last Fri- 
day's price of 26% then, the stock is selling at less than 5 times 
anticipated earnings of more than $6 a share in the current fiscal year. 
"Tandy's strength lies in its comprehensive monitoring of data on 
store operations, product lines, market penetration, and incentive pay to 
store managers, Mr. Frankel said, adding that the company's remark- 
able growth should continue for some years to come. Obviously, not 
everyone agrees with Mr. Frankel, and some regard Tandy as vulnera- 
ble now that debt has been increased by $100 million in connection 
with tenders of its own shares." 

The Metz column and a subsequent one on November 28 that dis- 
cussed Tandy's rationale for its stock repurchase program had a salu- 
tary effect on the stock price. By early January, Tandy rebounded to 35, 
helped along by a pivotal announcement that for the first time in com- 
pany history the billion-dollar barrier in annual sales had been 
breached. Consolidated sales for the 12 months ended December 31, 
1977, had totaled $1,014 billion. 

In early March of 1978, Tandy received another boost when it was 
selected as one of the six best stocks among Fort Worth-based firms by 
a panel of regional brokerage house representatives. Tandy was the 
only nonpetroleum company among the analysts' favorites. 

"The kicker is Tandy's minicomputer," noted Jim Phillips of Raus- 
cher Pierce. "They are 10 to 12 weeks behind on deliveries and the 
market seems to be growing fast. Some sources have estimated that in 
the next five years, 80 percent of the households in the nation will have 
some sort of minicomputer. If that is only half right, it can be a tremen- 
dous new piece of business for Tandy." 

Reporting on the survey, Herb Owens, the Star-Telegram business 
editor, wrote: "The respected Value Line Investment Survey reports 
that Tandy's return on net worth and its return on total capital are a lit- 
tle short of phenomenal. It enjoys a premier position in the burgeoning 
field of consumer electronics and seems to be doing everything it can to 
capitalize on that position for the benefit of shareholders." 



"THE BIGGEST' NAME IN LITTLE COMPUTERS" 419 

Financial World chipped in with a tribute to Charles Tandy in an arti- 
cle on March 15 that called him "a born salesman" and "a marketing 
genius." Tandy Corporation, the magazine declared, "is one of the top 
growth companies of the decade in sales and profits and an investor's 
delight." 

The article attributed Tandy's success to his ability to keep a tight 
rein on the company's purse strings. "We started off with no money, so 
the use of capital was one of the major criteria to measure the ability of 
our people," it quoted Tandy. "If you turn a decorator loose on a store, 
you can spend $150,000 easily. That's going to hit your return on capi- 
tal pretty hard. So we got by for years on $12,000 per store for signs 
and fixtures. People didn't mind because we weren't selling fixtures." 

In early April, Tandy journeyed to Cambridge, Massac huse tts, for a 
talk at the Massachusetts Institute of Technology. In the course of his 
hour-long presentation, he reminisced about the birth of the TRS-80 
and waxed enthusiastic about its early acceptance in the marketplace. 

"This past year, in August, we introduced this thing," he said. "We 
had news conferences and press releases sitting in the Warwick Hotel 
in New York. We are at one-half the price of the regular market, the 
closest guy to us. We didn't try to see how far up we could get it. What 
I wanted to know was, 'Can I get a decent profit?' 'Can I make a sale 
in here?' We've got a waiting list for these machines. And we're enter- 
ing a field that absolutely, up till now, there's been no place for us. 

"This is where we spend our money — in researching and thinking. 
And we've got men, a small team. It only took two men to develop that 
darn computer. Now, that's a little bit of an exaggeration, because we 
worked with National Semiconductor and Fairchild and Texas Instru- 
ments. I don't know how many geniuses. They're the people who knew 
all the about the chips and all the gut work. We got around to some of 
the people that make printers. We wanted to talk in terms of three, four, 
five, six thousand. Well, most of the time, computer companies don't 
call for that many in a year. We're calling for that many in a month. 
We're going to make them available to a lot of people. We're going to 
make them available to businessmen who have never had a chance, that 
could not afford a computer. 

"We think we've got something here that's going to be distributed in 
a different fashion than our competitors. I say competitors. IBM is our 
competitor. They don't even know we're in business. (Chuckle). But, in 



420 "THE BIGGEST NAME IN LITTLE COMPUTERS" 

our field, we don't plan to put on all that service that they put on. We 
don't plan to put on all that programming expense that they put on. 
They can't put anything out there under about four or five thousand 
dollars a month. Well, we're gonna put it out there for a total cost of, 
maybe, $3,500. Total cost. Now, if they came after this kind of busi- 
ness, they're not geared this way. 

"We've got 7,000 stores. We're in every village and hamlet all the 
way from the top of Maine to Nome, Alaska. And they're not going to 
be running a guy up there. Their custom is sending men out as sales- 
men, propeny aiuieu, making uig picswuauuno, w^«"^ "^j x ~ ^*— 
big sales. You can't afford to travel a man all up and down the high- 
ways for a $600 transaction. It costs too much money. Having our dis- 
tribution system gives us the shortest distance between our point of 
manufacture and the public. And for that reason, we think we'll have a 
place, a long-time place. 

"We're not going to compete with Digital. We're not going to com- 
pete with these systems, compete with these big guys. We've got our 
own little group of small business people who don't want to spend a lot 
of money, for whom we're prepared to manufacture, and our idea is to 
fit that size market." 

Tandy also made reference in the speech to a Standard & Poor report 
that had ranked Tandy Corporation number one in five-year growth in 
earnings among all of the corporations listed on the New York Stock 
Exchange. 

"Our five-year growth rate is 39.7 percent," he reported. "K-Mart, 
which is a name you know, that last five years has had a 19.5 percent 
growth rate; Long's Drugs, 19.5; Jack Eckerd, 19; Skaggs, 19; Petrie 
Stores, 18.9; Melville Shoe Corp., a New England company, Thorn 
McAn Shoes, 16.1. Out of all of them, we're number one. 

"Standard & Poor put all those corporations into a computer and 
brought up all those that had a 10-year record of unbroken growth. 
Then they put those back into the computer and picked out the compa- 
nies that had the largest percentage growth in the last five years. Out of 
all the corporations on the New York Stock Exchange, Tandy Corpora- 
tion ended up number one. And all this is based on Radio Shack, a 
company that was broke. 

"In pre-tax income per share earnings' growth, Tandy Corporation 
has had 59.5 percent over the past five years. Skaggs has had 29.7; Edi- 
son Brothers, 28.8; Dayton-Hudson, 23.9; K-Mart, 19.7; Standard 



"THE BIGGEST NAME IN LITTLE COMPUTERS" 421 

Brands, 18.4; Long's Drugs, 17.8. That was not earnings per share; that 
was pre-tax income. Earnings per share is practically the same. We're 
at 56.9, K-Mart was at 18, Petrie Stores at 25, Edison Brothers at 25, 
Dayton-Hudson at 21. These are fine companies we're comparing our- 
selves with, the best in the business." 

The institutional investors who had turned bearish on Tandy after its 
$100 million stock buyback with borrowed funds in July 1977 were 
looking at the company more benignly in the spring of 1978. With the 
price of the stock back up to 37%, Business Week on April 17, re- 
ported that Tandy was back in good favor on Wall Street. 

"Tandy has shown that its gross margins are more than adequate to 
absorb the increased interest expenses that were incurred last summer 
when the c ompa ny borrowed t o buy b a c k its st o c k," t he magazine de- 
clared. "Earnings per share are now expected to climb to around $5.65 
or $5.70 for the 1978 fiscal year ending June 30, compared with $4.34 
last year. Debt charges on the new debt will come to only 73 cents a 
share. And several analysts are forecasting that the company may be 
able to earn as much as $7 or more the following year. What looked 
like problems to some investors last summer and fall, now look increas- 
ingly like intelligent strategic moves. 

"What excites analysts is Tandy's apparently firm hold on the con- 
sumer electronics business, which has been growing at about twice the 
GNP rate over the last five years and is expected to continue to outpace 
the rest of the economy through the next decade as the young adult 
population swells in size. Radio Shack's share of this $10 billion-a-year 
business has grown from about 1 percent in 1968 to nearly 10 percent. 
As a result, Tandy's sales have been rising at a compounded growth 
rate of about 31 percent per year in the last five years, and its earnings 
have grown at an even faster pace." 

On April 26, the United States Investor, a weekly periodical pub- 
lished in Boston, credited the favorable publicity Tandy was receiving 
with boosting the price of its stock to 39. The publication called it "a 
remarkable recovery following the adverse news on its Citizen's Band 
operation." 

The following day, came a plug that couldn't have been any stronger 
had it been written by Charles Tandy himself. The author was A.R. 
Douglas, an associate in the New York Stock Exchange firm of John 
Muir & Co. and a syndicated business columnist, who informed his 
readers: 



422 "THE BIGGEST NAME IN LITTLE COMPUTERS" 

"We all dream of finding the 'next IBM/ a stock you could have 
bought in the past decades at any price with a reasonable expectation of 
future enormous profits. Such a stock and its group may now be in 
sight. It's the domestic mini-computer stock group. The rate of techni- 
cal advances taking place in the computer science area generally is on 
the order of astronomical. A warehouse-sized vacuum tube computer of 
two decades ago today is reduced to a much more efficient black box 
on a desk. All largely because of packing informational ability on the 
order of tens of thousands of bits into a silicon thing the size of a tear- 
drop. 

"One immensely promising goal — a mini-computer in your house to 
help run your house and your life for you, selling for less than a win- 
dow air-conditioner. To wake you up in the morning, check and antici- 
pate your shopping, your bank account, your health perhaps, your 
income taxes and on and on, you name it, a new indispensable. It's 
coming. The investment question is which of perhaps hundreds of 
stocks to play. Which automobile stock would you have liked back in 
the early 1920s? 

"I opt for Tandy Corporation (NYSE - 38) for the long, long range 
pull. Over the past decades, it has made fortunes for true believer inves- 
tors. Tandy manufactures some 40 percent of its electronic product mix, 
buys the rest at wholesale and retails the lot through its 7,000 Radio 
Shack outlets. Current sales come to around a billion dollars, up from 
$117 million in 1968. Sales are worldwide. The stock now sells at a 
low 7.7 times earnings multiple. Recent earnings history, $4.34 for 
1977, an estimated $5.85 for this year ended June and shooting for $7 
in 1979 on 11.8 million shares outstanding. Debt is $250 million. Some 
92 institutions own 28 percent of the shares. Management is considered 
excellent. The company is rushing full speed into the microcomputer 
area. There are 18,000 employees and 16,000 shareholders. 

"There is one caveat which helps account for its relatively low P/E 
multiple. While the company has a long history of stock splits and 
stock dividends, it has never declared a cash dividend and has averred 
no intention of doing so." 

By the second week of May, Tandy stock was trading at $40 a share, 
paving the way for another two-for-one stock split, the fourth since 
April, 1969. The announcement came in a tersely-worded news release 
on May 12. 

"The Board of Directors of Tandy Corporation today declared a two 
for one stock split-up in the form of a dividend, to be effected by the 



"THE BIGGEST NAME IN LITTLE COMPUTERS" 423 

distribution of one additional share of Tandy Corporation common 
stock, $1.00 par value, for each share of common stock outstanding. 
The distribution is expected to be made on June 30, 1978 to stockhold- 
ers of record on May 31, 1978. 

"On March 31, 1978, 11,987,000 shares of common stock were out- 
standing exclusive of Treasury stock." 

Garland P. Asher, Tandy's director of financial planning, gave four 
reasons for the stock split in a newspaper interview. 

1. The company had retired about 10 million shares over the past 
four years, decreasing the number of shares outstanding to 11.9 million. 

2. A stock split would increase the stock's liquidity in that more 
shares would be traded at the lower price. 

3. The spl i t wo u ld incr e a s e "reta i l " or indiv i d ua l stock ownershi p, as 

opposed to the trading volume generated mainly by institutional inves- 
tors who usually dealt in higher-priced stocks. 

4. The split would foster a "broader ownership," both in number of 
stockholders and in their geographical location. 

At the request of the Fort Worth Star-Telegram, Asher made a calcu- 
lation of the effects of the latest stock split and the three prior ones on a 
hypothetical investment in Tandy Corporation stock, taking into ac- 
count the spin-offs of Tandy Brands, Tandycrafts and Stafford- 
Lowdon. 

An owner of 100 shares of Tandy stock before the first stock split in 
April, 1969 would have, after the latest split, 1,600 shares of Tandy 
stock, 200 shares of Tandycrafts, 80 shares of Tandy Brands and 50 
shares of Stafford-Lowdon, he reported. 

During 1968, Tandy stock sold in the $6 to $12 per share price range. 
Pegging it at a mid-number of $10 per share, a 100-share lot would 
have had a market value of $1,000. 

At the current market, Asher advised, Tandy was selling at $40 per 
share, Tandycrafts at $17.12, Tandy Brands at $10.75 and Stafford- 
Lowdon at $11.50. This would give the portfolio a market value of 
$67,860. 

"Buy my stock and I'll make you rich," Charles Tandy had exhorted 
his people. Those who had followed his advice had reason to rejoice. 

The stock split had preceded Charles' 60th birthday by three days, 
and as he said later, "It was the best birthday present I ever gave 
myself." 

But the extravaganza that Anne Tandy threw for him at their home on 
Monday night, May 15, qualified as the best birthday party he ever had. 



424 "THE BIGGEST NAME IN LITTLE COMPUTERS" 

Faced with the problem of what to give a man who has everything, 
Anne came up with something she could be reasonably certain Charles 
did not already possess — a real live elephant, replete with a mahout, a 
couple of shovel-bearing retainers and several buckets. 

A delighted Tandy then donned maharajah's garb and clambered 
aboard the rented elephant for a couple of laps around the courtyard of 
the Westover Hills mansion, while the several hundred guests cheered. 
In designing the courtyard, I.M. Pei couldn't have had an elephant in 
mind, but the space was more than adequate. Later in the evening, as 
the party progressed, a 4-by-4»foot box was brought into the spacious 
living room for Tandy to open. When he did, out sprang a bikini-clad 
beauty who embraced and kissed the honoree. Topping off the festivi- 
ties were a pair of belly dancers. 

Among the multitude of presents stacked up in a corner of the living 
room, two matching boxes especially caught Tandy's eye. They had 
been decorated to look like the twin towers of the Tandy Center and 
were the gifts of Nancy Lee and Perry Bass. Charles wore a beribboned 
badge on the lapel of his jacket as he cut the birthday cake that con- 
tained fondant fruit and flowers, but no candles. On the badge were the 
letters, "VIP". 

It was his moment to savor. And there was so much to celebrate, so 
much to anticipate. 

On August 11, 1978, Tandy Corporation announced 1978 fiscal year 
sales of $1,059 billion, a 12 percent increase over fiscal 1977, and earn- 
ings of $2.75 per share, up 32 percent from the $2.09 reported in the 
prior year. And on August 23, came an announcement that Tandy 
planned to open 50 Radio Shack Computer Centers in the nation's top 
markets during the 1979 fiscal year. Each center combined a store, ser- 
vice facility, schoolroom, and display facility, selling and servicing 
computers and offering courses in how to run and program them. 

"While some of the stores will be located within new or existing 
Radio Shack stores, most will be separate entities, and within each 
computer center we expect to see at least one sales manager with exten- 
sive computer experience," Lew Kornfeld was quoted in the news re- 
lease announcing the computer centers. 

There were no longer any concerns about having to use the TRS-80s 
to keep track of store inventories. The TRS-80 was on the way to be- 
coming the hottest-selling PC in the country, with the largest share of 



"THE BIGGEST NAME IN LITTLE COMPUTERS" 



425 



the burgeoning personal computer market. Soon, Tandy Corporation 
would be calling itself "The biggest name in little computers." 

Charles Tandy was featured in two glowing magazine articles. In Au- 
gust, Financial World published an account of his success in marketing 
electronics at popular prices. "When you ask Charles Tandy how he 
turned his Tandy Corporation into such a fabulous growth company 
(No. 8 this year, No. 9 last)," the article began, "he quips, Tve been 
doing it for 30 years. It's a habit.' Then he bursts into happy laughter 
and qualifies his statement, 'We spend a lot of time on forward plan- 
ning, and a large percent of our budget goes to advertising.' 

"Tandy figured out the right formula for Radio Shack years ago," the 
article continued. "He puts his stores on known streets and keeps them 
sma ll. His overhead is also kept i n check in terms o f b o t h re nt a n d sal a - 
ries. But the key is in his hiring the most aggressive managers he can 
find and promising them the chance to make a lot of money. And many 
of them have. Store managers and other executives are on an extremely 
complicated bonus plan, which has resulted in 60 of them becoming 
millionaires. Assisting the stores is a nationwide TV and radio ad cam- 
paign that has truly made Radio Shack a household word. Further eas- 
ing the manager's job is the central computer operation which takes 
each store's inventory automatically four times a year and ships new 
supplies as they are needed. Weekly and monthly sales reports are care- 
fully reviewed to spot any potential problems. 

"Despite the elaborate use of computers and other advanced manage- 
ment techniques, Tandy Corp. remains a very informal operation. 
Charles Tandy is known to arrive at headquarters and then wander 
around the offices talking to executives and secretaries alike for an hour 
or so before ever entering his office. He does not hesitate to personally 
call a store manager to congratulate or criticize him. With all of its 
growth, Tandy has a very clear idea of how he wants every facet of his 
company run. And rest assured things are done his way. Tandy's phi- 
losophy is: 'If things cost less, then more people can afford to buy 
them.' Accordingly, he keeps the prices in his stores as low as possible. 
To accomplish this he began importing from the Far East, and more re- 
cently started manufacturing some of his product lines. 

"Tandy's vision of the future is optimistic. 'We are still looking for 
places to open stores and ways to refine our product lines.' He pauses. 
'Electronics is a fascinating business. We're still getting new technolo- 



426 



"THE BIGGEST NAME IN LITTLE COMPUTERS" 



gy from the exotic field of space research. Whoever thought we'd see a 
$600 computer? Well, we have one now.'" 

In September, Tandy's beaming countenance graced the cover of Tex- 
as Business, The accompanying caption stated; "Charles D. Tandy; 
$816,000 a Year." The magazine named him as the highest-paid chief 
executive officer of a major publicly-held company in Texas, topping 
the total compensation of the CEOs of such much larger Texas-based 
corporations as Tenneco, Halliburton, Dresser Industries, Texas Instru- 
ments, and Shell Oil. 

«m.„-1™,, T J.. *^„>a 1~:_. _1 j- 1-!„ A : . .. » ii. . nn 

v_aianoa xaiiKxy tan i cumpimn ctuoui ms uumpcmctuuii, U1C ltXUS 

Business article declared. "But his shareholders can't complain much 
either. Return on average shareholders equity has more than quadrupled 
over the last five years, rising from 8.7 percent in fiscal 1972 to 37.2 
percent in fiscal 1977, For the second year in a row, Tandy Corp. was 
the only retailer in the New York Stock Exchange to record an after-tax 
return in excess of 30 percent." 

In early September, Tandy picked up nationwide press coverage by 
proposing a constitutional amendment that would put a ceiling on fed- 
eral spending. In a talk before the Southwest Council of the American 
Electronics Association, he urged that federal expenditures be limited 
each year to 20 percent of the gross national product of the previous 
year. 

"There is no doubt that the federal government can operate in peace- 
time with expenditures of less than 20 percent of the GNP," he de- 
clared. "It did so until 1967. Since then, federal expenditures, as a 
percentage of the gross national product, have generally been above 20 
percent. In each of the past four years, federal expenditures have 
climbed to 22 percent or 23 percent of the gross national product. Ap- 
plying this proposed limitation to 1979 federal expenditures, and esti- 
mating the gross national product at $2 trillion to $3 trillion dollars, the 
United States would have $460 billion with which to operate in 1979. 
By the time such a constitutional amendment could be ratified and 
placed into effect, the GNP would probably be well over $2.5 trillion 
per year, and the limit on federal expenditures would then be $500 bil- 
lion. That is as much government as most citizens are willing to pay 
for." 

Passage of such an amendment, besides giving apoplexy to a few 
free-spending politicians, Tandy maintained, "would do more than any- 



'THE BIGGEST NAME IN LITTLE COMPUTERS" 427 

thing else I can think of to preserve what's left of our nation's free en- 
terprise system. Why do I say this? Because it would bring excessive 
federal taxation to a grinding halt. When a nation taxes individuals and 
corporations at an excessive rate, it discourages investment and expan- 
sion. When taxes on profits reach a point where the risk is not worth 
the reward — and we are approaching that point in this country — our 
private enterprise system will be well on its way to extinction." 

In his own company, however, Tandy had no qualms about going into 
debt. 

On September 7, Tandy Corporation announced it intended to sell at 
least $75 million of convertible subordinated debentures through under- 
writers later in the year, with the proceeds being utilized to reduce out- 
standing lon g -te r m b ank debt and provide gr ea ter fle xib i lit y f or the 
future expansion of the business. After meeting with the underwriters in 
New York, the amount of the offering was increased to $100 million. 
The 6Vi percent debentures, due in the year 2003, were convertible into 
Tandy Corporation common stock at the rate of $29 a share, which rep- 
resented a 14.85 percent premium over the closing price of 25 l A of 
Tandy stock the day before. 

The debentures sold out the same day they were offered on October 
25, 1978, even though declining stock prices and rising interest rates 
might have been expected to dampen market enthusiasm for convertible 
debt issues. The sellout demonstrated anew Charles Tandy's impecca- 
ble timing. The issue was planned for sometime during the week, with 
no specific date set. But after the Dow- Jones industrial index registered 
a technical uptick of around one point on October 24, following a de- 
cline of around 60 points in the prior week, the debentures were priced 
for offering the next day. 

For Charles Tandy, it would be the last convertible debenture offering 
that he would orchestrate. 

He was running out of time. 



ii 



Chapter 28 
Goodbye, Charlie" 



The opening of the new corporate headquarters atop One Tandy Cen- 
ter in January, 1978 had been a nostalgic occasion for Charles Tandy, 
e vo king t he mem ory of Tand y Leather C ompany's m o ve u pt own from 
15th and Throckmorton Streets more than a quarter-century earlier. As 
he had escorted visitors through the premises, he had often mentioned 
how much he wished Dave Tandy could see the twin towers overlook- 
ing the site of the company's former home at 2nd and Throckmorton. 

"I bet he'd be proud," Tandy had said "But I'm glad he doesn't know 
what it cost." 

Janet Lesok, Tandy's secretary, recalled, "He was really proud of the 
Tandy Center. He really loved it." The weekend before the move, she 
had hauled boxes of files and supplies to Tandy's new office so that he 
"could sit down behind his desk on Monday morning." The floors 
weren't finished and there was dust everywhere, but Tandy was deter- 
mined he was going to be at his desk among the stacks of boxes. 

"He wasn't even able to find his telephone, but he never said a thing, 
never complained. He was so happy to be sitting at that desk in his new 
office," she recalled. One incident of that period, what she called "a 
quiet moment together," remained sharply etched in Mrs. Lesok' s 
memory. 

"This was in the winter and it had snowed," she said. "I had walked 
into his office with something and he was standing at the window just 
looking out, and he said, 'Come over here, Janet, I want to show you 
something.' I walked over to the window and he said, T want you to 
study the footprints in the snow and tell me how many people you think 
are parking on that parking lot down there.' He was trying to figure out 
how many Tandy people were patronizing the paid parking lot across 
the street from the Tandy Center or were using the free parking on the 

429 



430 "GOODBYE, CHARLIE" 

other side of the river and riding the subway to the Tandy Center. He 
was very proud of being able to provide that free parking for our 
people. 

"I'll never forget him standing there counting feet in the snow. His 
mind just worked like that. 'If these people are parking here, what's the 
ratio to folks parking on the subway parking lot across the river?'" 

She recalled another incident shortly after the move to the Tandy 
Center, when a cattle truck overturned. "There were a bunch of New 
Yorkers in the office visiting Charles, and one of them looked out of 
the window and saw all these cattle roaming around downtown Fort 
Worth. He began to yell, 'Cows, cows, there are cows in the street.' 
Charles reacted as if nothing unusual was going on. He said, Tt hap- 
pens every day, every day about this time.'" 

She laughed as she recalled the problem Tandy had coping with the 
sophisticated new telephone system that had been installed in his new 
office. "He never got the hang of calling me on my extension. So you 
know what he did? He'd call the main operator and ask for me by 
name. Three-quarters of the time when he tried to do something the 

10&5L UH ictnuy Willi uic piiuiic;^, lit; u m&tuiuicoi puupiw witu vvuvjaia iav 

was talking, people in New York and all over the world. Here's a man 
who could memorize a P&L statement in seven minutes, but couldn't 
figure out the telephone system." 

Tandy loved to drink coffee, and he drank it all day long out of a big 
thermos that Mrs. Lesok filled in the morning and refilled in the after- 
noon. He served his guests coffee out of the thermos. But when a group 
of about 30 Japanese was scheduled to visit him in his office one morn- 
ing, he told Mrs. Lesok, "Forget about coffee this morning. You'd bet- 
ter make a lot of tea. I mean a whole bunch of tea." Mrs. Lesok not 
only complied with the request, but also laid in a copious supply of 
lemons, limes and mint. But when the guests arrived and the translator 
asked what they would like to drink, they answered, one by one, "Cof- 
fee, coffee, coffee." Not one asked for tea. 

"The blood just drained out of my face when I saw what was happen- 
ing," Mrs. Lesok remembered. "They were bound and determined that 
the v would be very Americanized when they got here. No tea. But we 
found coffee and everybody eventually got coffee. Mr. Tandy kept 
looking at me with a big grin on his face." 

Tandy was still breaking in his new office when he permitted Tina 
Flori, a TCU journalism student, to spend the better part of a day with 



"GOODBYE, CHARLIE" 431 

him in February for an article she would write for the TCU student 
magazine entitled, "Twelve Hours with Tandy." 

Miss Flori waited in the reception area on the top floor of One Tandy 
Center, from where she commanded a spectacular view from a 20»foot- 
high wall of glass. The surrounding walls, she noted, were of smooth, 
patterned oak, the floor of Italian marble. Sleek wooden coffee tables 
held Tandy brochures, quarterlies and annual reports. She had been told 
to be at Tandy's office at 10 a.m. He arrived at 10:55. Punctuality, she 
would see over the next 12 hours, was not his forte. 

Miss Flori described her initial impression of the legendary TCU 
alumnus: 

"Knowing he was nearly 60, had suffered a heart attack several years 
ago and a gall bladder operation more recently, I had expected a some- 
what frail, paunchy older man with typical stooped shoulders, perhaps 
even a cane. But there he was, large, erect, confident and smiling 
slightly. His hair was dark, though streaked with gray, distinguished yet 
slightly unkempt. He wore a conservative blue pin-striped suit, with a 
large, incongruous belt buckle proudly proclaiming, 'Radio Shack.' He 
met me in the hall. 'So you're my shadow for the day? Well, let's get 
started.'" 

He led her into his office that occupied a vast corner of the tower and 
seated himself in a high-backed brown leather chair behind a huge oak 
desk on which were stacked letters, reports and computer printouts. To 
his right was a side table with a telephone panel of blinking lights and 
an intercom system. On the other side of room, oppos